Business / automotive
Neostar, a new way of trading cars
Technology is radically changing the relationships between products and consumers. Except for the savvy tech in today’s vehicles, it looks like the automotive market’s supporting industry lacks a desire for rapid digitalisation.
Croatian Neostar is changing the traditional relationship between owners of preloved cars and new buyers. Remote assessment, car history, pricing, 360-degree inspection, plus service are now features of their platform and unique digital experience.
Dimitrije Trbović, CEO of Neostar automotive-tech start-up, shared their story with us, and we used the opportunity to discuss upcoming trends and opportunities in this attractive industry.
In one of the articles published just as you launched the application, I read how the automotive industry isn’t quite an early adopter when it comes to digital transformation. You said you scoped the room for consolidation and digitalisation of services on a local and global level. Can you describe your research phase and what you noticed as the biggest potential?
In the EU and USA, the used car market and servicing outside of manufacturer authorised centres is three times higher than at the official and authorised centres varying by country. On the other side, our research of mentioned service centres and dealerships has shown that 80% of them are mom and pop companies that have an average of 8 employees.
We realised that the consolidation process never happened in this market, unlike the new car sales market and official servicing in manufacturer-authorised centres, which came about in the 2000s.
On the other side, because of the weak investment potential, the opportunity for traditional consolidation is very low when it comes to brick and mortar shops.
That’s where we confirmed our thesis that the digital platform economy is not being initiated at the consolidated markets but the opposite, at the unconsolidated ones. Markets that are still attractive to customers, but with a small chance of being consolidated would have the highest potential.
The same thing happened in cases of UBER and AIRBNB. The first one never bought a single taxi company but changed the short-distance transportation paradigm. AIRBNB never bought touristic rental properties but created new offerings and user experience in tourism.
The used car market and servicing of that type of vehicles are primarily reliant on asymmetric information; one side knows what the other side doesn’t, making it one of the least transparent industries ever to exist.
Radical transparency from both sides is what we see as an opportunity for both buyers and sellers.
Trends that are transforming the automotive industry, like research and purchasing, are in your business area. Can you share feedback from some of your first customers?
Our first users are amazed. At first, those selling their vehicles don’t believe that posting, photographing, and inspecting their cars can be 100% free.
On the other side, buyers are amazed by the vehicle’s warranty and transparency because of the 60-point inspection we did to ensure their vehicle is in good condition and highlighted any cosmetic damages.
Not to forget the whole digital experience of safe online payment of agreed vehicle price, as well as the documentation generated automatically for both sides. In terms of servicing, users know their costs in advance, which is not a usual practice with servicing centres giving insurance against unwanted expenses.
Your team worked on the technology for almost two years. What was the biggest challenge during that time?
Well, all of it! There was no clear path for this field; we created our way, which is exceptionally challenging. For example, the database from which we sourced vehicle and servicing information was not adjusted to UX and UI practices familiar to consumers.
On the other side, it was challenging to do this in Croatia, where there is no prior experience with projects having platform infrastructure in general.
Which technology do you use for vehicle validation and capturing images and notes?
We have a custom and in-house build solution with information sourced from the EU’s biggest vehicle database. The interpretation of that data and the 360 photographing with 3D vehicle overlay highlighting and presenting the car was an in-house solution as well.
How long do you think it would take for the Croatian automotive industry to ramp up its digitalisation?
That is a slow-moving process. I often say that car manufacturers recognise you as a Vehicle Identification Number VIN. They do not know you by your name or as individuals; they know only your vehicle and only after you take it to the service. Another example is an APP owned by the most prominent car manufacturer, being down for two months.
Where are the obstacles?
It’s in the mindset of people who manage these organisations. The Kodak case is maybe the best example.
Forbes wrote about critical trends in your industry, stating connected supply chain and improved manufacturing, predictive maintenance and Mobility as a Service (MaaS) will be some of them. How do you see the development of these trends in Europe?
I agree that the future is in transportation on demand. But it will not happen as fast and not unambiguous. Things will change and be clearer but not necessarily as quickly and not in only one direction. That’s one reason why our project has a 10-year scope, we can’t be sure how the world will look like in 10 years, but we will surely follow trends.
Which methodologies do you use for growing your customer base, and where do you have more success at the moment, with buyers or sellers?
From traditional channels like sales, TV and PR, up to advanced digital marketing tools and techniques focused on an individual and personalised experience for our platform’s user.
We are making sure we use a wide range of methodologies crucial for our platform’s omnichannel nature.
We are currently still in the launch phase, which is the awareness stage of our campaign to reach as many users as possible. After that, we’ll slowly transition into the consideration stage, and in March, we expect users to start converting into buyers or sellers more intensively.
Can you explain a bit more about your service? Is it a separate ‘feature’/offering or incorporated into the buying and selling?
Our service feature shows the service providers near your location with a fully transparent end price based on your car model and service type you need.
You can use it without prior buying and selling the vehicle. It is incorporated in a way that after you buy your vehicle at the Neostar, we will keep notifying you when your service is due with offers and automatic service bookings such as ‘Winter is coming, time to change your tyres. Book your appointment now’.
Neostar is here to create the whole ecosystem where we take complete care of your car, saving you time and money.
What exactly do you do within the process before making a vehicle available for purchase?
After a user has filled in basic information about his vehicle, which cannot be older than 15 years and has less than 250 000 km travelled, in 24 hours, they get a notification for a scheduled vehicle verification by our NeoInspectors.
We photograph the car 360 degrees after checking the visual parts, looking for any cosmetic damages. They will be captured and highlighted in the images. There shouldn’t be any significant damages indicating that the vehicle has been involved in a traffic accident or similar.
The test drive is necessary to check the engine, transmission, unfamiliar sounds, smoke etc. After the process, which usually lasts around 30 minutes, if the vehicle has not fulfilled the 60-point checklist, it won’t be available for purchase. Otherwise, everything is ready to be published!
When will you have the capacity and resources to grow outside Croatia?
We plan to perform a proof of concept in Croatia in 2021. After that, we are ready to take over other global markets.
