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A Deal on Wheels
Last April, inspired by the recent spike in demand for used cars—as well as a growing number of used-car owners looking to profit from that spike—Michael Bor (MBA ’03), Aaron Montgomery (MBA ’06), and Will Boland (MBA ’09) cofounded CarLotz, based in Richmond, Virginia. It’s an innovative venture that’s designed to take the hassle out of the automotive sale-by-owner market. “Most people describe the process of buying or selling a used car as complicated or even scary,” noted Boland. He and Bor, who came up with the CarLotz concept, were friends and former investment banking colleagues. After some HBS networking, the two found Montgomery, who was working in McKinsey & Company’s automotive practice and had previous experience running multiple auto dealerships.
Here’s how CarLotz works. After agreeing to a target asking price, sellers pay an upfront charge of $199 to CarLotz, which then handles all the paperwork and headaches that typically accompany such transactions. CarLotz collects an additional $599 “success fee” only when a deal is complete. Since used and leased car resale values are so high, sellers typically make a few thousand dollars even after CarLotz takes its cut. “Once we realized that serving people—not selling cars—is the business we’re in, that established a basis for rooting all our decisions in creating a differentiated experience,” said Boland. “We’re pleased with how far we’ve come in a short time. Everyone seems to intuitively get the concept.”
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