MarketsMar 29, 2021
Used car marketplace, ACV Auctions, goes public as car rental stocks benefit from COVID
Digital Wholesale
Victor Lei
Discover
First there was Carvana disrupting how consumers purchased used cars (known for its car vending machines).
Now there’s ACV Auctions — an online wholesale marketplace disrupting how dealerships purchase used cars to resell — which went public on Mar. 24.
Historically, dealerships purchased their inventory of used cars via in-person auction places. Founded in 2015, ACV Auctions operates an online marketplace for dealerships and suppliers to buy/sell used cars.
ACV generates fees from cars sold/purchased on its marketplace while making additional income on arranging delivery, providing financing and offering insurance.
ACV relies on selling to dealerships, which were forced to shut down at the start of COVID. Rather than harming used car sales, COVID benefited the industry:
Carvana, a direct-to-consumer used car retailer, also saw a surge in demand during COVID. For ACV, 2020 became a massive year:
The US used car market makes up 36% of the global market and only 391k cars were sold through ACV’s platform in 2020 — less than 2% of the total US market. While ACV has a large domestic opportunity, they’re already looking to expand internationally, starting with Canada in 2022.
The near-term opportunity:
The world is experiencing a global shortage of semiconductor chips is are likely to continue well into 2021. This is creating a shortage in the supply of new cars which is shifting demand towards used vehicles.
