Car owners are mostly likely to visit dealerships for service during the first three years of vehicle ownership, J.D. Power reported in its 2020 Customer Service Index survey. The survey found that 88% of customers visit dealers for service in those initial years. The global insights company reported in 2018 that 64% of consumers wait at the dealership for their vehicle to be serviced.
In 2020, though, that changed. Car owners no longer wanted to sit in dealership waiting rooms as COVID gripped the nation. That meant a boon for companies that transported cars from place to place, and a significant opportunity for Social Auto Transport Inc., a gig economy platform dedicated to helping businesses relocate autos.
On Wednesday, Social Auto Transport secured a $1.5 million seed funding round to help continue building out that platform. The seed funding was led by Overline, an Atlanta-based seed-stage venture capital firm that focuses on startups in the Southeast. Other investors include Automotive Ventures, Estes Express Lines and Kevin Nolan, founder of Nolan Transportation Group and OTR Capital.
“We are thrilled to partner with the Social Auto team. We see tremendous opportunity to build a nationwide network for moving cars short distances with highly trained, licensed and insured gig economy drivers,” said Michael Cohn, managing partner of Overline. “With consumer interest in concierge service offerings increasing dramatically as a result of COVID, we see at-home pickup and delivery quickly moving from a competitive advantage for early-adopter dealers to a competitive must-have.”
Social Auto co-founder and CEO Nick Mottas saw an opportunity for the gig economy business while working in IT together.
Noting that the industry was reliant on truckers to move autos, Mottas teamed up with Rob Newton, Social Auto’s CTO, to form the company. Both Newton and Mottas worked together at Estes Express Lines, where the two met nearly 10 years ago.
Social Auto Transport was born in 2018 in Richmond, Virginia, working with Beta customer Carlotz. Mottas said he and Newton learned a lot about securing drivers, paying drivers and perfecting the business model. In March 2019, the product offering was further refined. Social Auto Transport expanded to Charlotte, North Carolina, in February 2020, just before COVID shut down the economy.
The timing ultimately proved fortuitous for the future of the company. Social Auto Transport was able to onboard between 15 and 20 car dealers to the platform as consumers suddenly shied away from sitting in a dealer’s waiting room for hours.
In conjunction with the seed funding announcement, Social Auto also announced its expansion to Philadelphia, and Mottas told FreightWaves that expansions to five additional cities in 2021 are likely, led by Atlanta in late February and likely the northern Virginia area in late March. From there, Social Auto is looking at cities in the Midwest and West for additional expansion.
“We want to be able to show that we are a national company [for a Series A funding round] and that we aspire to open up markets all across the country,” Mottas said.
Similar to Uber (NYSE: UBER) or Lyft (NASDAQ: LYFT), the Social Auto Transport app leverages the gig economy worker to help move cars where needed. The company works with dealers and car resellers, providing a fast and easy way to relocate vehicles, or in the case of the dealer, to bring a car in for service.
Unlike traditional car relocation services that require teams to relocate vehicles, the Social Auto Transport team leverages a relationship with Lyft that allows it to move a vehicle to a new location with only a single driver.
“We have a partnership and integration with Lyft, so when our drivers arrive, they swipe back … to arrange a Lyft ride back to the next pickup location,” Mottas explained. “All of that is automated so the driver doesn’t have to do anything other than get into the car we’ve summoned for them.”
Social Auto covers the Lyft cost.
The company has a goal of getting a driver to a location with one hour and 30 minutes, but Mottas said in 90% of the cases, a driver arrives within 45 minutes. Dealers arrange for the Social Auto service and customers receive a text message with all the necessary information — including details of the pickup, the driver’s name and tracking information so they know when their vehicle arrives at the dealership.
The entire process is then repeated to return the vehicle to the location of choice for the customer.
Social Auto drivers are also required to photograph the vehicle both before pickup and after drop-off to ensure it was returned in proper condition. Those images are provided to the vehicle’s owner.
Many of Social Auto Transport’s drivers also drive for Uber or Lyft. Mottas said Social Auto fills a complementary option for these drivers, who often see business slow during the middle of the day, exactly when Social Auto’s business picks up.
Dealers can benefit from using the service through improved customer service and potentially increased revenue. The J.D. Power survey found that only 26% of customers in the “mass market” segment of auto owners will return to the dealer if they have to wait for parts. If vehicle owners are not waiting at a dealership for those parts to arrive, this experience is improved. Dealerships may also identify additional service issues that need attention. Asking a customer to wait an additional two hours is sometimes not an option, but customers are more likely to approve additional repairs if they are not waiting, Mottas noted.
Insurance was a big issue that Mottas and Newton had to deal with as well. The company is insured through James River Insurance, a Richmond-based insurance provider. Social Auto pays for its insurance by the mile, allowing it to keep its costs down and also to know exactly what the insurance cost will be for each car move, which helps with transparent pricing.
“They were the ones that pioneered gig economy insurance with Uber back in the day, and they just happen to be in my hometown,” Mottas said. “They’ve been able to insure us in the ways we need to be insured for us and our customers.”
Gig economy drivers, he said, also like the Social Auto Transport model because they are paid for moving a vehicle but incur any of the costs such as fuel, insurance and vehicle wear and tear typically associated with a gig economy driving job.