BCGDV Featured Company: Launching heycar in the UK

heycar is a marketplace for quality used cars, built by BCG Digital Ventures in partnership with Volkswagen and Daimler. We asked DV’s Xiao-Xiao Zhu, General Manager of heycar UK, to give us a breakdown of the venture.

This week, BCG Digital Ventures, in partnership with Volkswagen and Daimler, launched heycar.co.uk, a marketplace for quality used cars in the UK. The UK rollout follows the successful launch of hey.car in Germany in 2017.

We caught up with heycar’s UK General Manager Xiao-Xiao Zhu to find out more about what heycar offers in the UK.

What is heycar?
Xiao-Xiao Zhu: heycar is a new, online used car marketplace launching in the UK, backed by automotive heavyweights Volkswagen and Daimler, and supported by BCG Digital Ventures. The UK represents the second major European market that heycar has entered, following a successful rollout in Germany in 2017.

What problems does heycar seek to solve?
heycar started with a simple question — how can buying a used car be made simpler? The used car market is full of pain points for both dealers and consumers. We live in a world where buyers are overloaded with choice and haggling is seen as a necessary evil. They don’t know who to trust, and can’t be sure that the car they’re buying is reliable or even safe. On existing used car sites, heavy advertising is the norm. All of this leads to a frustrating and unpleasant experience.

At the same time, dealers are being struck with large and continuously rising fees for listing used cars online, squeezing their margins without a guarantee of leads or sales being generated. We’ve developed heycar to solve these pain points. Through the latest technology, we’ll offer a simpler, more effective solution for both used car buyers and dealers. Our site will be ad-free, improving transparency and consumer trust.

Why do you think there’s such an opportunity for a new offering in the UK used car market specifically? What differentiates heycar UK from other, similar offerings?
With £50bn in value and over 8 million of used cars transacted per year, the UK used car market makes up one of the largest retail segment in the UK, and is highly profitable for major online marketplaces — Autotrader’s 2018 operating profit margin was 67%.

The heycar UK incubation team

There is no doubt that there are a number of existing players in the market, each claiming to the biggest, smartest or cheapest provider. We believe these claims, along with rising consumer expectations, create demand for a simpler solution offering trust and transparency. Transforming user experience, driving transparency and improving quality for both consumers and dealers will be key to winning in this market. For example, unlike other online used car platforms, the heycar.co.uk website is free of ads, and designed with a best-in-class yet simple user experience that allows customers to search and find a car they’ll love, complete with a finance quote, in a seamless online journey.

And to really emphasise the transparency and trust aspects, we only list quality cars from reputable dealerships that come with a warranty, are less than 8 years old, and have fewer than 100,000 miles on the clock. For dealers, we have transformed the method by which they list cars online: We charge them only per lead generated for their business rather than for each listing upfront. This will allow them to list all of their available stock on heycar, unlike on other platforms where dealers list only a proportion of their stock, further enhancing the availability of quality cars for customers on heycar.co.uk.

We believe that by providing a simpler solution to the market and championing greater transparency for consumers and dealers, we will demonstrate an appetite for a new brand in the UK.

How is heycar UK different to heycar Germany?
The UK and German markets have significant differences. For example, dealer groups and vehicle data are structured differently in Germany and the UK, with the German dealer and data landscape more fragmented than the UK’s more consolidated structure. In the UK, there’s one dominant incumbent in the used cars space, whereas in Germany there are a couple of major players. Finally, APR rates on car financing in the UK are typically higher than in Germany, as financing is more regulated in Germany.

The behavior of British and German consumers also differs, and the UK proposition has been tailored with this in mind. For example, the online experience is more functional in Germany as many consumers already know what they are looking for. The average UK consumer does more exploring and research online, so the UK site is designed to be more inspirational and offers tailored guidance.

Overall, while there are many insights and learnings from heycar Germany that we were able to build on, we have always been focused on building the best possible proposition for UK consumers and dealers. And that has meant that we don’t assume both markets work in the same way, and that we test and iterate every feature with a dedicated focus on UK specific pain points, behaviours, market landscape and regulations.

How did you go about building heycar for the UK market? Who worked on this venture?
As with most DV ventures, we started with a heavy emphasis on ethnography and research on UK specific pain points from consumers and dealers. We compared and tested various value propositions, business models and even brand names in the UK market before deciding to go with the current heycar proposition. And of course, all of our features have been developed and iterated with continuous quantitative and qualitative consumer and dealer testing to really make sure everything we do serves a clear user need.

Needless to say, none of this would have been possible without our fantastic multi-disciplinary team of designers, engineers, product managers, venture architects, marketing specialists, recruiters, embedded team members from the corporate partners, digital board members as well as the broad support of the BCGDV London operations team!

What was your proudest moment?
There were many proud and memorable moments while building heycar UK. However, I was particularly impressed by the degree and speed with which the DV and the heycar UK team grew together in the weeks leading up to the big public launch. Despite an incredibly ambitious launch timeline, the team grew with the challenges it faced and delivered on each of our ambitions.

What will the platform look like upon launch?
At launch, the heycar inventory comprises over 100,000 vehicles from over 50 brands across 1,400 dealer locations, essentially covering all of the UK. We are already in the process of signing up many more selected dealers and their quality stock.

Moreover, we will have launched heavyweight marketing campaigns across all relevant consumer and trade channels including TV, Radio, Out-Of-Home, Google, Facebook, SEO, Affiliates and PR — making heycar one of the largest new UK consumer brand launches of the past few years. We are convinced that heycar will stand for greater transparency and trust within the UK used car industry, raising quality standards for used cars.

Xiao-Xiao Zhu is a Lead Venture Architect at BCGDV, where he has led a wide range of innovation sprints and venture incubations with Fortune 500 companies in the mobility, energy and industrial goods sectors, primarily in London and Beijing. He is currently General Manager of heycar UK.

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