Why We Invested: Motive
Transforming the Car Shopping Experience
Author: Mansi Patel, Cortado Ventures Investment Analyst
Cortado Ventures is thrilled to have invested in Motive, an Oklahoma-based enterprise SaaS company focused on the automotive industry. Read on to learn more about the company, our investment, and how this technology will improve the overall car buying process for consumers and dealerships.
The Context: Why is the Process to Buy a Car so Frustrating?
How was your last car buying experience? Was it fully online? Was it fully in-person at a dealership? Or was it a combination of online and in-person?
Shopping for a car is quickly becoming time-consuming and often leaves both the dealership and the car buyer less satisfied and like their time is being wasted. According to Cox Automotive, the average car buyer spent ~15 hours researching, shopping, and purchasing their vehicle in 2022.[1]
When you were car shopping were you seeking trade-in valuations? Did you have a difficult time navigating a dealership’s website? Were you frustrated at any point in time during your car buying experience?
Based on a survey of 10,000 car shoppers and buyers, Cox found that customer satisfaction is decreasing: The share of buyers who were highly satisfied declined from 66% in 2021 to 61% in 2022. The increase in the amount of time buyers spent going through the process was just one factor contributing to the decline in satisfaction. Limited inventory and high prices also made the experience more difficult, Cox reports.
Unfortunately, for many the car buying experience is often long and tiring and at times frustrating. Frequently consumers are going to 5–7 different websites to complete a car purchase, which can easily overwhelm a new car buyer. We have websites today like Kelly Blue Book to get the trade-in information, the dealer’s website to check car inventory, banks to see if the buyer will qualify for an auto loan, etc. The problem here is not only are car buyers having to go to multiple sites for a car purchase but dealerships are potentially losing out on a car sale in this process.
The Auto Industry Goes Digital
The Pandemic brought about a significant shift in many industries and one of those industries was the automotive industry. Not only in supply but also in how consumers choose to purchase their vehicle. Nearly 30% of the U.S. new car sales in 2020 were completed online, which is a drastic increase from 2% online sales in 2019.[2] As consumers are shifting to online shopping, dealers need to find web-based solutions to drive sales and compete with places like Carvana that are offering fully online car sales.
To compete with these online solutions dealerships are piecemealing together websites to get customers the features they need i.e. inventory viewing, trade-in appraisal, loan calculator, etc. On average there are 6–10 different 3rd party integrations that the auto dealer website is hosting. While this helps solve the consumer frustration problem, this strategy is creating complex tech debt for dealerships, many of whom don’t even have an IT person to manage it. Cox Automotive had surveyed auto dealers across the nation and found that 87% of those surveyed indicated that digital retailing solutions have positively impacted at least one area of their business, reducing time spent, improving efficiency, and benefitting sales, profits, and relationships with customers.[3]
The shift to digital retail is going to continue to grow from here. As consumers spend less time in person at dealerships, it is vital for dealerships to create web-based platforms that can serve as the one-stop shop for all car buyer needs while also not having to piecemeal different 3rd party technologies.
One-Stop Shop for Car Buying
Trying to bring about change in a traditional industry can often be challenging. Traditional industries are typically slow to adopt new technologies. The true driver for change comes if there is a strong value add in terms of generating more revenue and increasing customer satisfaction. That is what John Habeck, the founder and CEO of Motive, realized that led him to create a vertically-integrated solution for these dealerships.
Motive is a dealership’s digital showroom. Car buyers can search for vehicles, retrieve their credit score and value their trade-in, build their deal and customize their payment plans. Shoppers can build and price a new car and submit a reservation request all through the Motive platform, white-labeled for each dealership customer to look like their own, sleek full-service website.
Existing trade-in tools, pre-qualification tools, and the car dealership’s website do not communicate with each other. Consumers are having to input the same information across multiple websites. Motive removes the need to input the same information and has integrated all the different tools used by car buyers into the dealership’s website. So now a consumer can shop and view the dealership’s inventory, check the trade-in value, and get pre-qualified from the comfort of one’s home.
For dealerships, they do not have to manage any of the backend integrations with the 3rd party websites or deal with 6–10 invoices per month for different technology services they’re using. With Motive, dealerships can make instant changes to their website, with no need for a training manual. Motive allows for easy integration to 3rd party service tools to enhance the customer buying experience. The true timeless win for dealerships is that the product is easy to bring into their existing websites and use.
Why Cortado Invested
1. Value Proposition — Motive’s platform allows for a seamless car buying experience for the car buyer and allows dealerships to be the one-stop shop for a car buyer. When multiple platforms can be replaced with one platform that increases customer satisfaction and is easier to manage, that is a clear win for both buyers and the sellers. When talking with dealerships about vertically integrated solutions they believed Motive to be a competitive advantage in both the short-term and long-term for any type of dealership. Dealers don’t have to piece together solutions and can offer all the features online shoppers are looking for.
2. Traction — In just the first 6 months of launching, the company signed on 15 new customers and increased revenues by 230%. Motive not only showed strong sales generation, but also sales funnel greater than they had capacity for. There clearly is a market need for this market that is driving dealerships to sign up.
Looking Ahead
At Cortado Ventures, we are dedicated to supporting Oklahoma-based entrepreneurs, who aim to grow the ecosystem and create jobs. Motive is targeting a very traditional industry that is ripe for change. Buying a car hasn’t become just more expensive, it’s also become a more frustrating and time-consuming process. When there is technology that can drive up customer satisfaction and provide time back to people, why not back the technology?
Cheers to innovation and growing Oklahoma!
About Cortado Ventures
Cortado Ventures is an early-stage venture capital firm that invests in ambitious, growth-driven companies, backing a new generation of economic prosperity for the Midcontinent region, defined as Oklahoma, Texas, Arkansas, Missouri, Colorado, Kansas and New Mexico. As one of the largest VC funds in Oklahoma, Cortado’s focus is on tech companies bringing innovative solutions to the energy and logistics, life sciences, and the future of work sectors. For more information, visit cortado.ventures.
[1] Cox Automotive’s Car Buyer Journey Study Shows Growing Frustration with Car Buying Process — Cox Automotive Inc. (coxautoinc.com)
[2] More consumers are shopping online for cars. Can dealerships keep up? — ABC News
[3] Cox Automotive’s Car Buyer Journey Study Shows Growing Frustration with Car Buying Process — Cox Automotive Inc. (coxautoinc.com)
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