From scraping a living in a loft to selling £600m worth of cars in less than three years, CarWow’s CEO, James Hind, is disrupting the UK’s new car market.

In 2010, Hind and his CarWow co-founders, Alexandra Margolis and David Santoro, set up a site called CarBuzz to collate car reviews from around the web. Working from the loft in Hind’s parental home, the project taught them two things: making money from online content is difficult and buying a car is not always a painless process.

The team started to wonder if readers’ questions and experience of buying a new car just might hold the key to launching a more disruptive and successful startup.

“We weren’t making any money and, at the same time, people were telling us the same thing – buying a car was a painful process and they never knew if they were getting a good deal or not,” says Hind.

“It’s a very un-British thing to do: to go in to a bunch of showrooms and try to haggle as if you’re in a Moroccan souk. People don’t like to argue over money and they’ve simply got no idea where to start or whether the price they end up with is the best price they could have achieved. They can also be annoyed at sales people who sometimes ignore them or – just as bad – pursue them too aggressively.”

From CarBuzz to CarWow

The idea soon formed that, while their site would still review cars to guide readers on their next choice, the serious money would come from putting car buyers and dealers in contact. Rather like a dating site for car buyers, CarWow was set up in 2013 to turn the process on its head. Potential buyers tell the site what car they are interested in so they can be wooed by dealers with their best price. Rather than tour endless showrooms looking for a deal, the deals come to them.

The idea was tested out at first with just three Volkswagen dealerships offering deals on the Volkswagen Golf model. It was a time-consuming, manual process but it did prove the principle of the service and encouraged more dealerships to join.

“We had a button people could press on the Golf review page to get a deal and I would just manually pass on their details to the three dealers before we got the system more automated,” recalls Hind. “It was very labour intensive but we had to show that the system could work. We then got some Audi dealers on board and Mercedes were not far behind.”

Driving success

In the early days they were turned down by every investor they approached. However, initial funding of £250,000 was finally secured in 2013 through angel investors, including Alex Chesterman, the founder of property website, Zoopla. Three further rounds have brought in £1.3m, £4.6m and £12.5m, from investors including the venture capital firm Balderton Capital, which backed Betfair and Love Film. The result has been a hiring spree, which has led to the initial three being joined by 70 staff in the UK.

To date, the new car market has been a huge success. In three years, CarWow has powered 25,000 car sales worth £600m – on which the site makes an undisclosed commission – through 1,500 dealers. This compares with 2.6m cars sold in the UK last year alone. But with roughly one in three of the UK’s franchised dealers now signed up, CarWow is well placed to make more of an impact in the massive new car market. The company’s next big push, starting in May, is to open up the German car market.

Hind believes the company’s success is down to offering consumers a service that saves them money and opens up new customers to dealers who are traditionally limited to their immediate vicinity. Ultimately, though, it’s the unwritten support of car manufacturers that has allowed dealerships to sign up to CarWow, he points out. “All bar one of the car makers really like our model, their dealers either love us or hate us, there’s nothing in between,” he says.

CarWow’s figures show that only one in four customers go for the cheapest quote. Three in four will instead chose to go with the dealer who has been the most helpful when they have asked questions online or who can supply the desired model in the shortest lead time.

“Car makers know they have a problem with the service in some of their dealers, or at least with some individuals, and we can help identify best practice because we pass that information back on to them through user reviews,” Hind says. “Sometimes sales people don’t display good product knowledge or they can be too pushy or appear not bothered to make a sale. That’s invaluable customer feedback a car maker and the person running each dealer might not otherwise receive.”

Aside from turning the relationship between the customer and the showroom on its head, the CarWow approach also threatens the established strategy of splitting up the country in to geographic franchises, which are designed to discourage price competition. Nevertheless, Hind claims car makers still react positively because CarWow can help customers remain loyal.

“Everywhere you go in the world, car makers sell through dealers which serve each area and we threaten that geographic division because we make it easier for someone in one part of the country to buy from a dealer who is many miles away,” he says.

“However, nearly all the car makers support us because they know that, without us, if someone gets bad service from their local dealer, that customer can still remain loyal to the brand and buy their car from one of their dealers in another town. Traditionally, they would be more likely to stay in their immediate area and simply buy from a different car brand.”

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