Considering that the Egyptian pound has lost nearly a quarter of its value against the greenback since the beginning of 2022, while the country’s car market is suffering from the same inflationary pressure and supply chain issues as the rest of the world, there has never been a greater need for auto financing.
This, coupled with the traditionally limited options in Egypt for those looking to finance a new purchase has created a ripe opportunity for online used car retailers like Carzami.
As the company’s Co-Founder and CPO Adham Hosny told PYMNTS, people who might previously have paid cash up front are increasingly turning to second-hand car marketplace operators to fund their auto purchases.
“If you are used to driving a Mercedes you aren’t going to want to buy a Honda,” he said, adding that finance solutions enable Egyptians to buy the vehicle they want despite a general slump in the economy.
Related: For Buying, Selling and Financing, MEA Auto Markets Turn to Digital Platforms
To create that possibility, Carzami has partnered with one of its earliest investors, the country’s largest vehicle financer — Contact Financial.
While Contact typically works with physical dealerships, the relationship with Carzami created an opportunity to launch a uniquely digital financing solution. Hosny added that the platform has even been able to offer financing with as little as a 10% down payment, lower than Contact’s in-person deals.
Although he said that some people will always want to visit a physical showroom, Hosny is optimistic about the potential of online platforms like Carzami to gain market share, pointing out that younger buyers in their late 20s and early 30s are especially open to the concept.
Prior to launching the platform, he said that Carzami’s founders considered various possible business models, including hybrid ones that incorporate in-person and online sales.
In the end, however, he said they settled on a “pure digital” approach, adding that platforms which opt to maintain a physical showroom tend to miss out on the efficiency gains to be made from the pure-play online proposition.
In the other direction, he said that traditional dealerships looking to branch out into online sales channels will struggle to compete with digital-native platforms.
“You can’t hold the stick from the middle,” he noted, speculating that existing hybrid solutions will have to choose to focus on either digital or physical sales at some point.
The Future of Online Car Sales
Looking at the global landscape of automotive eCommerce, Hosny said that different players are all trying to do the same thing within their respective markets: “All these platforms — Carvana, Cazoo, Kavak — are looking to create a better digital buying experience,” he said.
Related: Online Car Marketplaces Drive Profits for MENA Startups
He acknowledged, however, that online platforms still lack the in-person car-buying experience that consumers desire. But there are innovative ways to solve that challenge, including using technology to create a more immersive view of vehicles for sale.
Carzami is already experimenting with virtual reality, for example, a technology which Hosny said could solve the problem of depth perception that puts many people off buying a car without seeing it in person first. “The technology is not quite there, but it will be,” he added.
Pointing out that a photo can never be a good indicator of the depth of a trunk, for example, Hosny said that Carzami has invested in getting as close as possible to a 3D depiction as a two-dimensional screen will allow.
Until that day when car buyers can shop around in a 3D metaverse virtual showroom, platforms like Carzami have to settle for interactive 360° images.
In the meantime, Hosny said that Carzami is focused on its next fundraising round and bolstering its stock, which it purchases from a mix of dealers and owners.
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