The company says its Series A round, announced Tuesday (July 7) will help it expand on its mission to make selling a vehicle “as transparent and competitive” as trading stocks.
“Nearly 39 million used cars are sold in the U.S. every year, but for everyday consumers, selling a car is still one of the most frustrating parts of car ownership,” Bidbus wrote on LinkedIn.
“We are building a marketplace where verified dealers compete for consumer-owned vehicles — helping car owners get better offers while giving dealers access to quality inventory that has historically been difficult to source.”
In an interview with TechCrunch, the company’s founders said the new funding will also help Bidbus scale past its initial markets of California and Texas.
In that interview, the founders said their marketplace — in which multiple dealers can bid on a car — leads to average offers of $2,000 to $3,000 higher than what online market Carvana offers.
Bidbus’ co-founder and CEO Duke Yan said he came up with the idea for the company after years of purchasing and selling cars on his own.
When he tried to help his mom sell her car, the offers from dealers were “insultingly” low, leading Yan to put them in a group chat. He was surprised to see potential buyers offering bids higher than what the dealers had floated.
“Used-car affordability is not a financing problem. It’s a market efficiency problem. Consumers lack real price discovery for trade-ins, dealers struggle to source quality inventory, and much of the best supply is still trapped in people’s driveways,” Yan told TechCrunch.
TechCrunch notes that dealerships already buy vehicles at auctions to fill inventory, so the startup is not suggesting an unheard of concept.
Yan said Bidbus assists dealers by bringing them the most highly valued used cars, which typically come from private sellers. The company capitalizes on the spread between what online sellers are willing to pay and a typically higher dealer payout: a difference that can be in the thousands of dollars.
The news follows a report last week from Reuters arguing that the automotive market was showing more resilience than in past times of economic/political stress.
The report assigned the market’s sturdiness to high-income consumers continuing to buy big-ticket items, people turning to hybrids to reduce their need for high-priced gas, interest rates on new-vehicle loans falling to the lowest point in four years, and the industry offering loan terms that are as long as 84 months and bring down monthly payments.
