HelloCars is taking used car salesmen for a ride

TWO Sydney brothers have figured out how to take millions out of the pockets of Australia’s most hated people — used car salesmen.

Belinda Cormack bought her Mazda CX-3 on HelloCars.

FOR three decades, research firm Roy Morgan has asked Australians to rank the most ethical and honest professions. For 30 years, car salesmen have come dead last.

Now a Sydney start-up, founded by brothers Paul and Michael Higgins with the backing of their father, Mortgage Choice co-founder Rod Higgins, is cashing in on that widespread distrust of an industry for years plagued with pushy salesmen and scammers.

HelloCars, a low-cost, online-only used car dealership, has made more than $8 million worth of sales since launching in September. The site, which has won recognition from NRMA and Westpac, already delivers to customers Australia-wide, and will soon expand its vehicle purchasing to Melbourne and Brisbane.

Unlike traditional dealerships, HelloCars buys cars for an upfront price, which the company says works out to about $2730 more for the seller on average. By cutting out the expensive overheads of a bricks-and-mortar dealer, HelloCars is able to take a much lower margin and still turn a profit.

“Dealers will take around 20 per cent, our margins are between 4 and 9 per cent, depending on the value of your car,” Michael Higgins said. “We will offer you a fair price, guaranteed to be at least $1000 more than a traditional dealer.”

Surprisingly, despite the popularity of classifieds sites like CarSales and Gumtree, HelloCars is the first full-service online used car dealer in the Australian market. It’s based on similar models that have proved hugely successful in places like the UK, US and Germany.

“It just seems like common sense,” said Mr Higgins. “My background is in the auto industry, and I could see it was quite clear that from a customer point of view, used car sales is just not done well.

“We looked around, and all over the world, there are these models springing up. We took the best bits of those that we thought would suit the Australian market.”

With between two and 2.5 million used cars sold every year in Australia — compared with about 1.1 million new cars — and more than one third of Australians saying they are prepared to buy a car online, Roy Morgan says it’s an industry ripe for a “decade of disruption”.

“We saw the trend,” said Mr Higgins. “We could see where the customers were going. People are comfortable buying electronics online, buying clothes, it’s not a stretch that customers are buying vehicles online.”

HelloCars founders Michael, left, and Paul Higgins.

Mr Higgins said HelloCars was doing very well in regional areas, where local dealers typically had limited choice and high prices. “We have even delivered to Perth,” he said.

If a customer wants to sell their car, they go to the HelloCars website, which gives them an automatic quote upfront. If they’re happy, they then book an inspector to come out and give the vehicle a 230-point inspection — if it passes, HelloCars picks up the car and does all the paperwork.

When a someone buys the car, it even arrives with a bow on top. It may seem like a gimmick, but according to Mr Higgins, it’s a nice little “Instagram moment” to distinguish HelloCars from a typical used car dealer.

“When you buy something from online, the package comes and you get really excited. It’s like that multiplied by one million,” he said. “People quite like it. It’s a nice experience. They take a few photos, share it on their Facebook.”

To ease customer worries about buying online, HelloCars offers a seven-day money back guarantee. Mr Higgins said the return rate was about 3 per cent, but half of those customers typically bought another car.

“We only deal in cars that are under six years old and fewer than 100,000km,” said Mr Higgins. “If a car didn’t pass our inspection we wouldn’t sell it — probably one in four or one in five wouldn’t pass, or some might need a little work to get there.”

Mr Higgins said more than 60 per cent of HelloCars’ traffic came from mobile devices. “[Part of the attraction] is being able to buy on your phone, on your couch on Thursday night, instead of making it a whole Saturday,” he said.

Belinda Cormack, 29, described the HelloCars process as “easy”. “It didn’t require too much investment of my time,” she said. “It was simple, low stress, high communication and I didn’t feel like I was being bullied or pressured into anything.”

At $29,000, the public servant said her Mazda CX-3 was “pretty similar” in price to a traditional dealer. “What appealed to me wasn’t so much the cost as the ease of the process,” she said.

“I just didn’t want to spend my weekends going around to car yards. My previous experience with dealers hasn’t been great. As a female I’ve taken my brother-in-law when I’ve gone to look at cars.”

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