In the September edition of the Expanding Payments Choice Playbook series, PYMNTS discusses the importance of end-to-end digital car buying, a mode of auto sales in which not only can consumers buy their automobiles online, but they can also access financing, rewards schemes and receive disbursements digitally.
Get the report: PYMNTS Expanding Payments Choice September-2022
Reflecting the growing preference for digital solutions, recent years have seen the emergence of several platforms that are helping digitize auto markets in the Middle East and Africa, with an eye to the specific challenges of that region.
As Eerik Oja, co-founder and CEO of South Africa-focused rent-to-own platform Planet42, told PYMNTS, in emerging markets, life is often “more volatile,” meaning that vehicle financing plans that extend over five years or more don’t have the same appeal as they do elsewhere.
To solve this problem, Planet42 offers a flexible rent-to-own subscription model with minimum contract terms of just six months and the chance for customers to return the car if their circumstances change.
To enable flexible financing and expand credit coverage to underserved markets, Planet42 uses a data-driven approach to credit assessment that can approve financing deals far quicker than traditional bank-issued loans, with payouts often being made the same day as applications.
For Planet42, the target market is buyers with steady incomes who have nonetheless been refused credit by rigid bank lending rules. But another vehicle financing platform, Moove, is catering to the needs of South Africa’s gig economy workers.
Launched in Lagos, Nigeria, in 2020, Moove finances drivers’ vehicle purchases and then automatically collects revenue-based repayments from their earnings thanks to a partnership with Uber.
In the latest expansion of that partnership, Moove is offering its rent-to-buy service to Uber drivers in London to help them finance new electric vehicles as part of the ride-hailing firm’s mission to fully electrify its platform in the city.
Read more: Madrid Regulates, London Electrifies
Online Marketplaces Address Multiple Challenges
The rent-to-own models being pursued by Planet42 and Moove indicate an important transition that is happening in vehicle markets the world over. Rather than manufacturers alone stepping up to meet demand for online and other nontraditional car sales, digital platforms are filling the space and connecting buyers with existing dealerships, who don’t necessarily have the resources to take on the challenge of digitization alone.
A similar observation was made by Tarek Kabrit, co-founder and CEO of Dubai-based online auto marketplace Seez. As he told PYMNTS earlier this year, in the case of “Amazon, Airbnb, Uber, none of these guys own the inventory. What they did is they created their infrastructure, [including] tech integrations, payment logistics, operations [and] customer support, and then they connected supply and demand.”
Watch the interview: Automotive Retail Needs to Think More Like Uber and Open Table to Sell Cars Online
Using the analogy that Seeze is like “Shopify for car dealers,” Kabrit explained that the company first started out providing a toolkit to help dealers build online showrooms and digitize their sales processes. Once the platform had partnered with enough dealerships, Seeze moved to create a unified marketplace where car buyers in the U.A.E. can browse vehicles from multiple dealers on the company’s website or mobile app.
While Seeze, Moove and Planet42 have built platforms that connect buyers to dealerships, the Egypt-based startup Sylndr is looking to emulate a different variation of the platform model that has already proven popular elsewhere.
Much like Carvana in the U.S. and Cazoo in the U.K., Sylndr is an online marketplace for used vehicles that makes it easy for owners to sell their cars while providing a fully digital experience for buyers at the other end.
As company CEO and Co-founder Omar El Defrawy told PYMNTS, as well as streamlining the whole process, Sylndr overcomes what has been a significant hurdle to the emergence of a peer-to-peer used car market in Egypt: a lack of trust.
“There is no proper marketplace for buyers and sellers to meet, and there is no incentive for dealers to be transparent about their product,” he said, adding that Sylndr is trying to help people feel more secure and comfortable about buying or selling vehicles.
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