In Spain, harnessing the power of group buying for cars
BARCELONA -- Unions meet with management to argue for better salaries and benefits. Tour groups get cheaper ways to travel around the world. Groupon helps you get your nails done for 60 percent off. The interconnected world has made collective bargaining a new way of life. Spanish start-up EverybodyCar looks to help you and five of your neighbors to do the same to get your next car for significantly less.
EverybodyCar calls itself the first social network for car buyers, connecting people in the same geographical area that are interested in buying the same car. C.E.O. David Pareja and his small team then negotiate on behalf of the perspective buyers to get the best deals.
The collective bargaining works both ways. A dealership can contact Pareja and say something like, if you find a group that wants to buy an overstocked car, we'll knock 5,000 euros ($6,500) off the price of each. On the other hand, if up to six people sign up on EverybodyCar.com interested in the same vehicle, Pareja and his team can advocate on behalf of the group to try to strike a deal.
The greatest achievement so far has been 7,000 euros off each of 18 Range Rover Evoques, a car which Pareja says normally costs, after sales tax, 41,900 euros. This is an almost 17 percent discount. But, how does the start-up make its profit? They get 500 euros from each buyer. That means the new car owners still saved 6,500 euros each and EverybodyCar banked 9,000.
"The price is always lower than the competition and, of course, below the market price," says Pareja.
Spain is not known as a consumerist nation that changes cars every four years or so. Half of all Spanish car owners don't look to change until their cars are at least eight years old. Moreover, about 20 percent of Spanish drivers only change vehicles when they have owned them for ten or more years.
In order to encourage consumerism in a stagnant economy, the government has been targeting those longtime users. If a citizen gets rid of his or her ten- to 12-year-old vehicle and buys a new (or less-than-a-year-old) car by the end of March 2013, he or she can take last chance advantage of the PIVE government initiative that offers another 2,000 euros off the price of the car. Essentially, the government offers 1,000 euros, minus income tax, while the car dealer must offer another discount of at least 1,000 euros, which, of course, could be included in the EverybodyCar deal.
In the six months they've been online, EverybodyCar has had more than 6,000 registered buyers, 500 vehicle groups created, and 200 dealers working with the platform. Starting out in Spain, it is set to expand to Mexico, the U.K, the U.S. and Italy by September. The team says that EverybodyCar is, for now, the only company like it that is working directly with both sides of the table, making it only an indirect competitor of well-known sites like CarWoo, which mostly advertises and organizes sales.
Like many start-ups in Telefonica's Wayra incubator, EverybodyCar is a work in progress. It's been up and operational for two and a half years, but with a significantly changing modus operandi. Recently, the company moved away from its original business model of the dealerships buying monthly subscriptions to post deals on the site. Pareja says Spanish dealers are typically old-fashioned and traditional, not very keen on subscribing to and posting on websites. "The dealers don't want to work, just to sell," he says, which motivated EverybodyCar to change its focus to the consumers.
In order for dealerships to take advantage of the site, they only need to check it periodically. "The only question is if they are lucky enough to be the first to visit the webpage," Pareja says, to call shotgun on the buyer group's request.
The next step is EverybodyMoto, in beta right now, for the collective bargaining of motorcycles and motorbikes.
Photos: EverybodyCar
This post was originally published on Smartplanet.com