STARTUPS

Used cars intelligence

Buying a used car is always a bit of a risk for buyer since one can get a stolen, uncleared by customs or technically deficient vehicle. Adaperio online project and its founder Alexei Danilov can supply explicit and reliable information on a vehicle of interest.

Idea inception

Prior to starting a business of his own, Alexei Danilov worked for MDM Bank where his career was quite successful as he advanced from a back up office administrator to retail business chief in one of the branches. Later, he was deputy director of international tax planning department at Cliff law firm in Moscow.

Alexei was aware that about six million Russian nationals buy used cars annually. Most of them are guided by a rational desire to save money by purchasing a decent car for smaller cash. It’s a common knowledge that over the first few years of its lifetime, a vehicle loses 35% to 40% of its value even if it’s well taken care of and is in a perfect condition. Yet even well experienced drivers can not always distinguish between good and bad cars. So Danilov launched Adaperio service (revealing the truth, in Latin) which is primarily intended to help buyers and prevent deceit by dishonest sellers.

Payback time

To launch the new project, Alexei Danilov invested his own funds. Initial spending was within RUR 200K-300K ($3.3-5K). Later, Danilov partnered with Rustam Baekenov who focused on technical matters thus allowing Danilov to improve the product and its marketing.

The project did not take long to break even. It became self-sufficient within few months, but the company managers had to waiver their salaries. One of the main sources of such a result was saving on advertizing since the promotion was done via social media where posts were published in specialized interest groups. Organic growth stimulation was also fueled by links, references and reposting.

The service was sold for the first time via VK social network a month after it was launched. A client transferred RUR 50 for the report provided. That was a great inspiration for the project founder. Danilov personally communicated with the first buyers and sent them personal letters.

During the first year of the startup operation, its monthly growth was at 35%. According to Danilov’s assessment, such growth rate required additional investment of some $150K. That would enable project’s full repayment within 18 months. Nevertheless, it turned out to be impossible to raise the amount required and hence the project continued developing on its operating assets. Currently, company’s monthly revenue reaches four to five million rubles ($65K to $80K).

At the moment, an online verification service is priced at RUR 292 ($4.6). Having paid the amount, a car owner can save a great deal more on potential overpayments.

Platform capacities

The platform aggregates all data available on vehicles exploited in Russia and generates a report on each car of interest. A license plate and VIN suffice to collect data from online sources (traffic police, federal customs, national statistics agency, National Credit Histories Bureau, Supreme Arbitration Court, insurance companies, banks, and offline partners). The information provided to Adaperio’s clients includes:

  • Ownership history and owners’ succession;
  • Car mileage;
  • Initial package;
  • Whether a vehicle has ever been stolen or restricted in disposal;
  • Pledge with a bank;
  • Vehicle images obtained from open sources;
  • Traffic accidents;
  • Operation as a licensed taxi;
  • Fines, customs and other documents.

The platform’ analysts have discovered that about a third of the sellers reverse mileage counters. An average mileage cutback is 54K kilometers. More than half of the cars (some 58%) have had three to four owners by the time they are checked by Adaperio, whereas 23% of vehicles have already had five, or six, or even ten owners. 77% of used cars on sale have had traffic accidents.

At the tip of the spear

At the moment the service was launched, an online services market was not fully developed yet. One of its major competitors at that moment was Moscow government’s portal, www.mos.ru, which had a similar concept. Still, www.mos.ru was from the very beginning limited to Moscow only, whereas Adaperio’s operation is nation-wide, hence a lot of efforts was devoted to educating users who were thoroughly explained what were the sources of each piece of information, how a report is produced, and why it is reliable. Danilov is pleased that people come to realize the necessity to check out a used car before buying it. Nobody would love to pay sizeable money for a wrap-up.

A major problem at the project’s outset was lack of understanding between Adaperio and traffic police. The officials of the agency were unwilling to provide information on traffic accidents which impaired reports’ completeness.

Nowadays, Adaperio finds itself operating in a highly competitive sector. Such services were found lucrative by both small companies supplying limited scale reports, and major vehicle classificators. With some of them such as Drom, Bibika, Am.ru, partnership agreements were negotiated, while Avito decided to build up a separate competitor.

Business advancement prospects

Danilov started developing his idea in the B2C niche. Over time though he realized good prospects may be found in B2B segment. Dealing with that kind of clients was arranged within the Insurtech Lab insurance accelerator performance framework. The data accumulated by Adaperio helps insurers optimize scoring technology.

Vehicles clearance market is deeply integrated with used cars sales market and can have a serious impact on it. Many players now strive to increase their sales through dealers which is evidenced by policies of some of Adaperio’s competitors. Danilov beieves the used cars market will hold a lion share of the P2P deals which would require online support on a new advanced level.

A survey by Adaperio reveals that 71% of buyers of used cars do not mind paying one to five percent of the vehicle price for having a possibility to get a really good purchase option. Annual sales of used cars in Russia amount to at least RUR 2 trillion ($32 billion), so even 1% of that is a good profit. An extra advantage is the fact that Adaperio is not competing with classified Internet resources on their terrain, but strives to shape a market of its own.

By Christina Firsova

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