Negotiating a new vehicle purchase is often an exercise in futility and sometimes ends in frustration. Now, there’s a Canadian company that’s offering a unique new app that makes the entire purchase and financing easy. How? By bringing the vehicle and finance offers to you…without the salesman and without any pressure.
Carbeeza Inc. (
TSX-V.AUTO,
Forum) is an automotive sales platform powered by A-I that connects consumers and dealers. The company has developed a proprietary, web-based, cloud-hosted application enabling consumers, financial entities, and vehicle dealers to facilitate a fully-informed interaction. The app is non-intrusive and in no way compromises your privacy rights.
Dave Jackson of Stockhouse Media was joined by the Carbeeza’s Chief Executive Officer, Sandro Torrieri, to get our investor audience up-to-date on this leading-edge technology platform play.
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TRANSCRIPT BELOW:
SH1: To start off with, Sandro, can you tell us a little bit about yourself and the history of the company?
ST: Myself? Well, I'm a serial tech entrepreneur. I basically build software companies, hardware companies launch them, bring them to the marketplace, raise venture capital, things like that. This is our first public company. So Carbeeza is basically product that was envisioned in house by our SME and then further taken the idea and expanded the thought process around it until we have the product that you see here today, it is a full featured automotive platform that allows consumers, as you said, to be able to go and shop for their vehicle, be able to get their best possible price in the vehicle and get their best possible financing all out of the comfort of their home. So they never have to go to a dealership and haggle and go through the whole process, which is very annoying. As a matter of fact, I believe it's 99.42% of consumers in North America despise the auto purchase and the auto financing process. So we're here to help them. We're here to save them. We're here to become their as Michael would call it their companion.
SH2: Can you update our investor audience and your Carbeeza shareholders on any significant, new company developments?
ST: Well certainly, we've been taking a slow process since our launch. Now we basically did a reverse take over the last July, we completed that in early September, we did a soft launch at the software and we're still in soft launch mode and what we've been doing is across the country province by province, starting with Alberta, our home base moving to BC, Saskatchewan, Manitoba now into the heart of Ontario. Within about six weeks or so, we will launch Ontario in that range, there abouts, we will launch Ontario and then move on to the rest of the country and of course from there our goal is to move into the US at that point in time. In this last six to eight months, there's been a tremendous amount of changes in the software, changes in and the way we approach consumers and things like that, making it easier, making it better, making it more powerful.
This is more than five years in development, so it's not something that was developed overnight. There's a lot of effort and time put behind this product. A lot of thought went into how it would be, how it would work in the back end and the things that you see as a consumer in the front end. It's just like the things that you see, you don't see all of the hard work that's going on in the background, all the gears that are working, all the pulleys and all the mechanisms that are happening in the background and think of it as like watching a duck in a pond, it's so serene and calm, the water's nice and calm and the duck is just moving along but underneath it's pedaling like mad trying to stay afloat, it's the same kind of idea.
There's a great deal of stuff happening in the background. A lot of AI technology back there, a lot of really new concepts and how to deploy data and things like that back to consumers. So it's a really cool product from that perspective in terms of where we are. We are, you know now going and doing some capital raise, we're doing a debt venture internally, which I will lead in terms of the lead investor on that, and that we're also doing a capital raise as well. That'll be starting in about a month or so as we reach out to some reach out to some possible investors and things like that.
SH3: You’ve recently announced an extension private placement with proceeds of up to $5 million dollars. This may be news to many investors. Can you unpack the benefits of it?
ST: Sure and that's the debt venture we're talking about. That's not the capital raise. The capital raise is a little bit different and like I said, the debt venture, I will be leading that investment. I believe in this company; I want to reinvest in this company as much as possible. The use of proceeds is like any typical tech company. In a tech organization, there's not a lot of overhead, especially in our organization, we're a true SaaS model, software as a service, we host on platforms like Amazon and Google and things like that. So we don't have to worry about that infrastructure, although we could easily manage that infrastructure but we don't worry about it. We concentrate on developers and we only look for the cream of the crop, you know? So those proceeds are used to continue to add developers to the team., add a little bit towards the sales side of the organization, probably another 50% growth there and a lot of the proceeds we will be in our marketing team sending out messages to the marketplace community, creating relationships with dealers and consumers and things like that
SH4: You’ve just launched in Manitoba, adding new franchised dealership locations across western Canada. Can you expand on this initiative for our investor audience?
ST: Certainly, we had just completed the launch of Manitoba as you've indicated. We've now moved into Ontario. There's a two-step process for us first of all before we can launch this to consumers, we need to make sure that we have the dealers and the dealer inventory into our system. So the first phase is of course, for us to go in into a new province and reach out to those dealers, have them become our customers and then of course, bring that inventory into our system and when we have enough capacity, that's when we open up the inventory to the consumers in the marketplace but really, I think your question is around franchise dealers, we have focused ourselves on franchise dealers and certified pre-owned dealers versus corner lots, small lots and things like that.
What we want to do is we want to give consumers protection. We are already providing consumers protection by allowing them to at the comfort of their home, without any stress, be able to find the vehicles that they want by be able to get their financing or choose their financing. Here in Canada, there are 61 lenders and someone's always going to provide you as a consumer, your best deal depending on that particular day, that moment in time, your situation, things like that. So we find that for you and of course with our system that you're able to communicate to the dealer to also negotiate your best price without actually ever seeing them but what we also do to is we also add the franchise component when you're dealing with franchise dealers, these are reputable dealers.
These are dealers that in many cases, carry badge names and things like that and have relationships with the main manufacturers and so if a consumer purchases a vehicle from these types of dealerships, they get ongoing support. They don't get the hassle, they don't get the runarounds, they're still going to get their best deal as if they bought it off a corner lot or a dirt lot or something like that but it's just another added layer of protection. So we want to encase the customer in as much protection as possible. Not only like I said, in their acquisition, but who they buy it from.
SH5: For company shareholders and potential investors, what kind of future development and progress can we expect for Carbeeza across North America?
ST: Well, certainly Canada of course is really a small marketplace in comparison to the rest of North America. Literally, United States is 10 times the size of Canada but it happens to be larger when it comes to automotive purchases, both new and used. So as we expand into the US marketplace, of course, our growth becomes that much quicker and you know for the investors, we hope that that turns around in terms of profitability and return on their investment dollar and things like that.
SH6: Can you give us an update on the state of the retail automotive industry and the company’s intrinsic value to the car-buying consumer?
ST: Wow, the industry, well, I'm not an industry expert, so I'm going to caution you there. The dealers have had some difficulty trying to keep vehicles on the lot. Manufacturers have had difficulty producing vehicles in quantity and of course the dealers in Canada will also face competition from American dealers that have been coming to Canada, purchasing used inventory and things like that, and dragging it out of this marketplace. So what that means to the consumer is increased prices. So you have less inventory to work with in the course increased prices. Carbeeza is able to help the consumer once again, shop for that vehicle, negotiate their best price and again, the most important thing when purchasing a Vehicle is your purchase price but it's really your financing. If you get a piece of, of if you're buying a V code and you're paying 7% financing versus 10% financing, your overall cost of that acquisition is significantly higher.
So we show you all of that as a consumer, we show you the differences, we like consumers to want to be in a four year purchase of a vehicle versus a five or six year and then Canada, you can have loans as long as nine years and that's terrible for a consumer, when consumers get caught in those kinds of situations, it's a really bad situation for them. So we try to help consumers avoid all those pitfalls. I hope I answered your question.
SH7: Sandro, you’ve said that “you’re not just a lead provider, but a toolbox of fintech tools.” How so?
ST: Well, again, it's the magic that's in the Carbeeza engine at the background that the consumer doesn't see or the dealer doesn't see is, is making all those selections for that consumer so that when they're looking at vehicles, all of that relevant information is there at their fingertip. So things like if they have a trade in it's there, we'll tell you how much your trade in is worth, we'll tell you if you purchase a vehicle of this type, what is it going to cost you as an offset? We show you all the incentives. So if you're in the military, you have an incentive program. If you're in other programs, there's incentives for you. So basically, it's an all-in-one tool kit that basically allows a consumer to slice and dice their deal any way they want and always be able to find again, their lowest overall cost of acquisition and that's really the key.
SH8: Regarding the app itself, how exactly does the consumer always stay in control?
ST: Well, first of all, the consumer's anonymous, all right. There is a point in time where the consumer may want to make themselves known to a dealer but the dealer has no idea who you are when you're connecting to them, we provide all of the information that's important for the dealer to be able to make a decision as to how they want to respond to the consumer's needs but they don't need to know who you are and that's very important. So the application allows those consumers to shop again anonymously and that's also true for not just the vehicle and the dealership, it's the price but also on their financing as well. We are monitoring here in Canada, there are 61 lenders on average in Canada. Our AI engines are monitoring the behavior of those lenders on a 7 by 24, 365 basis.
So we are able to predict how lenders will make decisions on a particular consumer. If we're talking, say credit score, we'll know exactly how that consumer's going to be going to be managed but it's all anonymous. So again, the consumer has all the data, all the tools, everything that they need and no one ever notices them shopping. It's kind of like going on Expedia, you’re looking for to go on a trip somewhere, you're not exactly sure the destination is, once you decide what the destination is, you're not exactly sure which hotels you want, what the flights you want to take, so you're always gathering information and then you're leaving that evening, going back the next day, gathering more information than you're leaving.
We expect consumers will use the car application exactly the same way and we would want them to do it that way. Go in, gather data, go away, think about it, come back, gather data, go away, think about it. At some point in time, you're going to get a picture of what is a really good deal for yourself on a Jeep Cherokee or whatever it is that you're looking for and you're also going to realize, okay, not only is this a great deal, call it a great deal. I can buy it now because I got a good price from the dealer but I also have all of that financing information and of course, trade in incentives and things like that, all bundled into one.
SH9: The company looks set for strong growth in 2022. How are you placed to expand operations?
ST: Because it's a SaaS model. There's not a lot of people infrastructure behind this. Everything that we do is based upon technology. If we find a function that is repeatable once we're going to automate that. All right. So it's not that we have anything against humankind or anything like that but we're trying to make the product and the organization as efficient as possible, drop the costs wherever possible and use humans for what they're really good at and use machines for what they're really good at. So growth for us as we go along, doesn't require a lot of people, a lot of personnel, if we were to grow let's say from say a million dollars in sales to a hundred million in sales. Our operational cost may vary by a percent or two, our operational cost in terms of people and things like that may vary by 15 or 20%.
So as we move along and as we're continuing to grow, we're always automating. We make that investment upfront, and then we forever are able to take advantage of that. Let me give you one example. When you sign up a dealer you need to bring their inventory into our system, just like you have an Autotrader and Kijiji and whatnot. There are companies out there that basically have relationships with dealers and they're responsible for making sure that people like us have that data once a day, twice a day et cetera and they're called syndicators. The problem is that for me to capture that data from those syndicators, I have to pay basically $50 per dealership on a monthly basis. If you have 10 dealerships, that's not a large investment or ask, but what happens when you have a thousand dealerships?
Right now, we have over 300 dealerships, we'll reach a thousand and dealerships within eight months to a year. We're now paying, hundreds of thousands of dollars and more and that as we continue to grow, that's on a monthly basis, we decided to build our own software. We build our own software for the syndicators. We grab our own data and, basically, we replace the syndicators with our own tool sets and by the way, we can make those available to other organizations if they want to use that same technology. So that's an example of how we're able to save millions of dollars over a year or two, depending how large we as organization and that those savings are always coming into the organization and we do that in every aspect of the company. Again, keeping the manpower down and only looking for the most brilliant people in all parts of the organization, development administration sales marketing et cetera.
SH10: What separates Carbeeza from the competition and makes your business model unique?
ST: Well, I like to think that what separates us from the rest of the marketplace is the people. We have some gloriously, phenomenal people in the organization. I could speak about our architect. I could speak to our lead sales manager of VPs sales. I could speak to our administration our lead of marketing, front end development. I like to think of them as being world class in their capability and the application being world class. So again we're not quick at just hiring anybody. We have a very, very long process. We're looking for that cream of the crop, so I believe that's a big factor and a big differentiator for us.
SH11: …and what should retail and institutional investors be looking out for moving forward?
ST: It's really interesting that because the automotive market is such a large market that small incremental positions in the marketplace generate tremendous returns now. So for us when we do a transaction, we're charging basically $350 dollars per transaction Canadian. If we are able to capture 1% of the marketplace, that's over a 225 million revenue stream for us. Based upon our operational costs and whatnot, right, we're, we're managing about a 96 to 97% return as an organization. I guess what I'm trying to say is that it's a highly profitable business and you don't need a lot of market share in order to see those profits if you will.
SH12: And finally, Sandro, if there’s anything I’ve overlooked please feel free to elaborate.
ST: Well for those investors that are out there looking in the marketplace to look at tech companies, I'd urge them to take a look at Carbeeza, carbeeza.com, you'll find our information in terms of investor documents. What we're doing as an organization, what we do going forward and at the very least just watch us and if you have a chance download the app on either Android or apple or you can use our application on our website as well it's available as a desktop application. So again, just keep an eye on us. Perhaps you'll find this interesting. We also trade Toronto stock market under the symbol AUTO and that's it for me. Thank you so much for your time today, David.
For more information, visit
www.carbeeza.com.
Investors:
https://www.carbeeza.com/investor-relations.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.