heycar: revolutionizing the used car market

Team 53°N talked to Markus Kröger CEO of heycar, and Rebecca Schneider Talent Acquisition Manager

Markus Kröger has made a career out of growing businesses, with a history of scaling well-known juggernauts like Delivery Hero and PayPal in Germany. Since September last year he took on the challenge of becoming CEO to heycar, a new subsidiary of Volkswagen Financial Services, designed in collaboration with Boston Consulting Group Digital Ventures. Heycar is an online platform that aims to disrupt the second hand car market by effectively connecting car seekers and dealers.

With traditionally a strong position for OEMs on the German car market, and used car sales on the rise, heycar is entering a market ripe with opportunity. The attraction for Kröger is the chance to build up a great company culture whilst taking on the significant endeavour of challenging two already established players in the sector.

The heycar difference

Kröger is confident that heycar has the right recipe for success through its dedication to quality and client support, features that differentiate it in an industry traditionally focused on price. Heycar aims to have all pre-owned cars on its platform fully vetted, under the age of eight, with less than 150,000 kilometres on the clock. Taking this stance is a win-win for both dealers and clients. As Kröger explains: “dealers can place a car on the platform at an appropriate price without fear of competition from overpriced, inferior cars. It creates a fair environment.”

From the client’s perspective, heycar want to foster a partnership of security and trust. Their ambition is to develop life-long relationships with clients, by becoming their single point of contact for all related services like guarantees, financing and car servicing. Importantly, heycar also explicitly invite other brand dealers (than VW) to join the platform, providing clients with a variety of choice, whilst making their platform more competitive.

Kröger is also working with data scientists and design thinkers to create a seamless user experience. He emphasises the importance of investing in getting to know your customers and building a product around their behaviours and needs. heycar’s user-interface is designed to remove many of the pain-points associated with used car buying, whilst helping users to find suitable cars quickly and easily.

A new business model

Heycar has been similarly innovative in their business model, specifically in how to attract dealers to the platform. Their incumbent’s revenue model requires dealers to pay a subscription fee per car. Kröger points out that this creates a conflict of interests; dealers benefit from quick sales, whilst the platform profits from cars staying online.

HeyCar takes a different approach. Kröger says, “We want to align our interests and our revenue model with the interests of the dealership.” This means that heycar is only paid once the dealer makes a sale. Whilst apparently not a novel idea, it is a difficult one to execute since there is traditionally no guarantee that dealers will report sales. Without going into details, Kröger tells us that heycar’s real innovation is in its development of smart incentive structures that nurture trusting relationships with their dealers.

Where to next

Having only just launched in October last year, Kröger assures us that the German used car market presents enough growth opportunity to contend with for now. However, with a name like heycar it is clear that the company has plans to travel in the future.  For our INSEAD readers, heycar is scaling fast with great opportunities for new MBA grads!

And finally, our two wacky questions..

If heycar was an animal what would it be? “A young Labrador – a beautiful dog that looks good, at the same time it is super smart and really good friends with people!”

And if you could hire anyone in the world to work at heycar who would it be? “The one guy who knows cars inside out! The uncle in the family who’s stamp of approval on a car is the most trusted guarantee you can find.”

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