Car dealerships in Los Angeles typically sell their shiny new vehicles to people with cash, credit -- or both -- and steer less promising customers to their used car lots. But even pre-owned cars cost more than many jobless and underemployed people can afford. Los Angeles auto dealerships have, by necessity, written off these "unqualified" buyers. But starting this summer, they -- and auto sellers across the country -- may enjoy an unprecedented opportunity to sell cars to virtually anyone.
Groopid.com, which bills itself as the "world's first ever group bidding car auction portal," has devised a car-buying model that could reduce the purchase price by more than 90 percent while still turning a profit for auto dealers and manufacturers.
Buy a New Car for $200
The average price of a new car tops $30,000 -- more than the average annual salary of a WalMart worker -- and high-end electric vehicles like the ones Tesla produces approach the $100K mark. Groopid aims to drop the cost of a new car to about $200 for the winning bidder. Given that the price of a used car tops $15,000, Groopid opens a vast new market for auto-buying.
Groopid provides a new twist on crowdfunding, popularized by sites such as Kickstarter and IndieGoGo. Just as thousands of small donations have helped raise money for filmmakers and start-up companies, inexpensive bid passes purchased by a large group of people help pay for the auction winner's car. The bid passes help pay for the cost of the vehicles, which keeps the starting price of each auction low.
Crowdfunding for Car Buyers
"What better way to make something more affordable to people than group purchasing power?" Groopid Founder Bryan Randall said in an interview. "Even mainstream writers and directors such as Spike Lee have turned to crowdfunding to fund expensive film projects. Each person putting in a little eventually adds up to a lot for the one person (the campaign initiator). And people openly give money to these campaigns for some sort of reward or incentive in return," Randall said.
"With Groopid, the group pays into the cost of a vehicle to make that vehicle more affordable. Although one person (one of the participating bidders) gets the vehicle at the unbelievably low purchase price, the people (the remaining unsuccessful participating bidders) who helped to contribute to the low price are awarded also through the Groopid voucher/rebate program," Randall added.
The rebate program would compensate the unsuccessful bidders by giving them, for example, a $30 gift certificate to a restaurant for the $30 they spent on bid passes. The rebates ensure that everyone who participates in a Groopid auction receives something of value. The "everyone wins" concept is important to Randall.
Hard to Lug Groceries Home on a Bicycle
He insists that Groopid be inherently fair to everyone, particularly those in its target audience -- people in the situation he found himself in not that many years ago.
Randall was married and the father to three small children when he lost his job in 2008. Before long, he also lost his car and credit rating and had to travel by bus to look for work and by bicycle to purchase groceries.
Although his financial situation has since greatly improved, the memory of that painful time inspired him to build Groopid. He wants to create a community that supports people in similar straits without taking advantage of anyone in the process.
Groopid Goes Green
Randall also hopes Groopid will help improve the environment by making electric cars more affordable.
"Electric vehicles are our future," Randall said, "if we want to remain healthy occupants of this beautiful blue globe. Zero emission is needed and I applaud visionaries like (Tesla Motors CEO) Elon Musk for being bold and doing what's needed."
But electric vehicles are out of reach for the average consumer, Randall said. "This is where Groopid and electric car manufacturers, like Tesla Motors, can form an alliance. Groopid provides a platform that will put more and more unaffordable vehicles in the hands of people who typically could not even consider making such a purchase. As the Groopid user community grows our platform will be the canal that funnels these electric cars into everyday communities increasing their consumer exposure rate and raising the demand for services like charging stations. Groopid could be a major contributor in expanding the electric car market."