Frontier Car Group’s Cars45 has operations in Kenya and Nigeria and is looking to work with OLX Group to expand operations in emerging markets.
The Frontier Car Group will use OLX Group’s US$400 million to fuel expansion in emerging markets. The $400m investment, comprising a primary injection of capital in FCG and the contribution of OLX’s joint-venture shares in India and Poland, as well as the acquisition of shares held by other investors, founders and management making OLX Group the largest shareholder in FCG and puts the valuation of FCG at $700m.
The deal will accelerate FCG’s ranking to one of the top five car marketplaces worldwide and number one in various markets in Africa where OLX strategically pulled out to make room for Cars45.
In a statement, Martin Scheepbouwer, CEO of OLX Group, said: “Together with FCG, we are aiming to build the leading global used car marketplace, offering a premium and convenient service to millions of car buyers, sellers and dealers. We’re in a unique position to accelerate the expansion of this platform worldwide. Our experience in India is a great proof of concept, where within the space of a year, our joint venture has already increased the number of stores threefold, with car purchase volumes continuing to grow by 10% month-on-month.”
FCG’s instant cash services, combined with OLX’s proprietary classifieds technology and reach, have transformed the online car marketplace, making buying and selling used cars more convenient and efficient for individual car sellers, buyers and dealers.
Through FCG, car dealers have access to a wider range of inventory, proprietary inspection reports, floor-plan financing, pricing guides and other innovative services; while sellers are offered a suite of new services such as “guaranteed buy”, inspection, financing and a large number of ancillary offerings, such as warranties and insurance.
OLX offers dealers and sellers a convenient, reputable, and widely known listing service to buy and sell used cars around the globe.
The two firms will work together to allow for faster expansion while improving and increasing the services available to buyers and sellers, setting a new industry benchmark for the used car trade.
The firms also see the deal as one that will benefit dealers from improved intelligence via a Dealership Management System, an enhanced re-sale capability via OLX, and provenance and pricing data via CarFax and Blue Book-style products. Sellers will also gain a new range of ways to sell their used cars in a trusted and transparent manner.
OLX, first invested US$89M in FCG in 2018, providing capital for the Berlin-based start-up to enhance its services and expand to new geographies, including the acquisition of WeBuyAnyCar in the United States. Both companies currently work together in Latin America, Asia, and Poland, where, collectively, nearly 30 million used cars are sold annually – more than double that of China.
“Together with OLX and Prosus, we are aiming to revolutionize the used car market in several emerging and developed economies by adding trust, transparency and a comprehensive suite of services to all participants in the ecosystem,” said Sujay Tyle, the 26-year-old co-founder and CEO of Frontier Car Group.
Tyle added that FCG has nearly tripled performance across every key metric since the first OLX Group investment less than 18 months ago and has expanded to four new countries in that time.
“This is a testament to FCG’s team, the ripe market opportunity, and the results of early integration with OLX in our key markets,” Tyle concluded.