Bay Area Start-Ups Looking to Disrupt Online Car Sales

Online buying and selling could fall into a grey area with state regulators

With all the haggling, the hassles and the headaches, buying or selling a used car can be downright stressful. Now, several Bay Area start-ups founded mostly by Stanford Graduates are working to disrupt the traditional buying and selling experience. “We don’t have a showroom,” said Minnie Indersoll, the COO of Shift, one of several new online car selling companies. “We’re fundamentally quite different from a dealership. We’re not an end-to-end. We don’t ever purchase the cars. We don’t take title of the cars. We don’t have a showroom.” Since Shift doesn’t own the cars, it is not a licensed dealership.

This is where the disruption comes in. Shift, uses its website to pair buyers and sellers in what Ingersoll calls a “peer-to-peer” marketplace. Beepi, another start-up based in Los Altos, does the same thing, but Beepi’s co-founder thinks his company has an edge. “We think it’s important to play buy the rules if you want people to trust you,” Beepi co-founder Owen Savir said. “Even before we launched we got registered as a California dealer.”

Carlypso , another start-up headquartered in a small office in San Carlos, also opted to get registered as a California dealership. We got the license in order to be able to buy cars,” said Nicholas Hinrichsen, one of Carlypso’s Co-founder. Whereas Beepi and Shift don’t normally buy the cars, Carlypso buys the cars, but then sells them online instead of in a traditional used car lot. “We don’t store any cars. Only if and when someone buys a car he’ll pick it up from us, unless he wants us to ship it to him,” Hinrichsen said.

As the drive to disrupt the car sales industry races ahead, it’s catching the attention of traditional dealers. “We have met with the DMV and the DMV has indicated that they have an investigation ongoing,” said Larry Laskowski, the Executive Director of the Independent Auto Dealers Association of California.

In a statement to NBC Bay Area, a DMV spokesperson said “We are aware of these business models; however our policy is not to confirm or deny the existence of investigations.”

All three companies said they are working with the state to make sure they’re following all the rules and regulations. “We’re definitely working with the regulations, but we’re also engaging with the DMV and we’ve also been in talks with them since day one to try and push regulation forward and how we can try to bring it to the 21st century,” Savir said.

While scrolling through Yelp reviews, most companies receive five stars, but some reviewers complain about everything from wrong title, to expired smog certificates, to unavailable cars. Shift acknowledges the challenges and Ingersoll says her company is working to meet customers’ expectations. “There’s really a challenge in growing so fast and maintain a level of customer excellence so we’re not dropping the ball on just the little things,” said Ingersoll.

All of the start-ups say they want to take on the challenges and move into the fast lane of car sales. What they won’t say is how fast they’ve moved. None of the three would say how many cars they’ve sold in the year or so they’ve been in business, but all say it’s in the hundreds.

Consumer advocates say no matter where you buy your car, do your homework. Check for recalls and have a trusted mechanic inspect the car.

The non-profit Fair Warning looks at other online car companies like these and details state and federal regulations and law. Click here to read the Fair Warning story.

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