The UAE’s second-hand car industry is worth over $2.5bn but remains a nightmare to navigate. Serial entrepreneur Saygin Yalcin’s latest venture, SellAnyCar.com, is threatening to completely revamp the sector
Selling your car in the Gulf is a pretty miserable experience. If it’s more than a couple of years old and in less than perfect condition, your only option is to try out the classified sections of local newspapers or websites. Prepare yourself for a few weeks of midnight phone calls, meetings that are not kept, strangers turning up to your house and offers that border on the absurd.
Enter Saygin Yalcin, a German-born entrepreneur of Turkish descent, who despite his age (he turned 30 earlier this year) has an envious track record in the e-commerce sector. Yalcin took the plunge in 2009 and flew out to Dubai, alone and armed only with a backpack, and proceeded to spend three months in a hotel in Al Barsha setting up what would eventually become Sukar.com, an online private shopping club. Sukar.com was bought by Souq.com in April 2012, with Yalcin becoming a partner at the Jabbar Internet Group at the same time.
In June last year, Yalcin became an inactive partner at Jabbar (while still retaining his share in the firm), and decided to turn his hand to something else. After taking part in what he refers to as “a broken experience” attempting to sell two cars, he hit upon an idea that has already been successfully used in other parts of the world.
“It took me six weeks to sell my car, and 19 appointments with strangers,” he recalls. “I had to take time off work every time, and people wouldn’t even show up for appointments. What really triggered it was when I figured out how much time I had wasted, and I calculated that if I had just sold within half an hour, it would have saved me time, risk and paperwork.”
The answer, of course, lay in Yalcin’s specialist area: e-commerce. Following in the footsteps of the UK’s We Buy Any Car and America’s CarMax (now the country’s biggest used-car retailer and a Fortune 500 company), the entrepreneur launched SellAnyCar.com. Despite only being a year old, Yalcin says the firm is already one of the top five second-hand car outfits in the UAE, and will be in the top three by the end of the year.
“I realised that there is a huge automotive industry here, but nothing that combines it with the power of the internet,” he says. “We are getting over 500 appointment requests a day, which is something no other regional conglomerate could claim.”
The concept is disarmingly simple. By uploading a few basic details about their car onto the SellAnyCar.com website (make, colour, age, mileage and so on), prospective sellers receive an immediate valuation. They can then make an appointment at one of the branches throughout the country, where the car will then undergo an inspection to test that valuation. If the customer is then satisfied, the money is wired directly to their account. The entire process, Yalcin says, takes only 30 minutes and the company says it will buy any vehicle that it inspects — even wrecks.
The difference between SellAnyCar.com and the host of classified websites that have recently sprung up in the UAE is that the car is then sold on to a network of traders and distributors, instead of back into the general population. Some of them are then shipped outside the Gulf, where buyers are perhaps less picky than the well-heeled residents of some of the region’s major cities.
In the UAE, the company has signed a deal with the Fasttrack vehicle servicing centres that are attached to some Emarat fuel stations.
“We have a huge cost advantage,” Yalcin continues. “All we’re basically doing is inspecting a car for free and then offering a price. After that, it’s business to business.
“A car that’s not wanted by a lot of people in the country, maybe because it’s four or five years old, is still a car that’s worth driving — but that’s been deprioritised by the big firms here.”
There’s little doubt that the car market is big business in the Gulf. Over the next five years, the market for cars and vans is set to grow by about 50 percent, according to consultancy Oliver Wyman. In the UAE, over 360,000 new vehicles were sold last year, a rise of 16.3 percent on 2012. And despite a clampdown on lending by the UAE Central Bank, the country’s lenders seem only too keen to offer vehicle financing to prospective owners. According to the Lafferty Group, outstanding debt from car loans to UAE residents rose 16 percent last year.
It all adds up to a bonanza for some of the big family firms — the Al Habtoors, Al Futtaims, Al Naboodahs and so on — who have the rights to sell some of the world’s biggest car brands in the UAE. But given the region’s love of new cars, little attention has been paid to the second-hand market, which Yalcin estimates as being worth $2.5bn a year in the UAE, and $3.5bn a year in Saudi Arabia.
There’s also plenty of potential to grow, given that in most mature markets, the used-car sales are actually more valuable than new car sales.
“Logically, every new car becomes a used car and it will be sold several times, while a new car is only sold once,” Yalcin says. “I believe the revenue potential for this business is huge. Looking at mature markets like the US, the UK and Europe, this business model has become a multi-billion-dollar industry — and they are actually solving a much smaller model.
“Think about the transparency, the organisation and the infrastructure you have in those countries, where selling a used car is a hassle, but less of a hassle than it is in the Arab world. So we’re solving a much greater problem for a growing industry.”
Given that SellAnyCar.com is a private company, Yalcin is reluctant to talk numbers, but he projects the firm could post revenues of $500m in five years, claiming that it could become a billion-dollar company in “eight to ten years”.
It sounds like a bit of a tall order, particularly as the wafer-thin margins mean that the firm will have to rely on colossal volume numbers in order to achieve that kind of revenue. Yalcin says that SellAnyCar.com doesn’t charge the seller anything; instead it takes a small cut from the company that buys the vehicle.
“We justify our margin by offering a service to businesses,” he says. “We tell them that we inspected the car already so they don’t have to put labour into doing that. Secondly, we’re solving their volume problem. No-one else in the entire region can give you, say, 50 Toyota Camrys by Friday. So I solve their sourcing problem and their labour problem.”
Right now, however, it’s still early days. Despite the fact that the firm doesn’t have the kind of overheads sustained by its competitors — there are no fancy showrooms, for example — Yalcin says that starting up SellAnyCar.com was hardly a cheap proposition.
“We have huge amounts of capital, because building a brand is always expensive,” he points out. “No matter what product you’re launching, product cost is one fraction of what you need to build. Plus we have huge plans to grow into the rest of the Arab world, and you can’t do this with just a few million dollars.”
Yalcin does not reveal how much funding the firm has received, but does say that it is the highest-funded internet start-up of its age in Middle Eastern history. The best-funded internet firm in the region so far has been Souq.com, which has raised $150m in financing to date, valuing the company at at least $577m.
In terms of future funding, the chief executive says he is less interested in financial investors than in strategic partners who can help the company expand faster, especially into new countries. That has already proved useful for SellAnyCar.com’s launch in Saudi Arabia, which took place in July. Turkey is on the cards right now, and other countries are set to follow.
“We are filling up the GCC, starting with Qatar and Kuwait, and then we are going into a very lucrative and interesting market: Jordan,” he says. “We will at some point stop growing geographically because there are certain Middle Eastern countries that are not ready yet, due to political reasons.”
Growth outside the Arab world is ruled out for now; Yalcin has already set up an entity called the Global Car Buying Alliance, in which different companies have different territories assigned to them.
“Places like Germany and Russia are already managed by a partner, so we won’t compete unless we create a joint special purpose vehicle to make sure we don’t go against our agreements,” he says.
Another avenue for growth could come via expanding the services that SellAnyCar.com provides. What about car rental, or selling the vehicles on to the public?
“I wouldn’t exclude the ability to sell cars ourselves from any future plans,” Yalcin says. “But that comes with service centres, refurbishing, showrooms and so on. For me, it’s kind of too offline for now, but I wouldn’t exclude it 100 percent.”
Despite his history of moving about from project to project, Yalcin says that the firm is “at least a ten-year project for me”, although he’s also considering becoming a business angel investor. He also sounds fairly non-committal about going public, although, again, he doesn’t rule it out.
“There are many companies that I see that go public prematurely because they have this initial phase of success, but I believe an IPO is just one point in time,” he says. “It’s important to make sure you’re ready, and it won’t happen within the next five to seven year period.”
In the immediate term, the focus will remain on scaling the business up, making sure he has the right team onboard (Yalcin says that around 40 percent of his time is spent on trying to hire the right people) and keeping those volumes flowing in. Whether that will be enough to make SellAnyCar.com a billion-dollar company remains to be seen, but what’s clear is that the Gulf’s neglected second-hand car market is finally entering the modern age.