Business & Real Estate

Bay Area startup Carlypso to launch used-car selling service in Sacramento

Carlypso co-founders Nicholas Hinrichsen, left, and Chris Coleman say their business concept was forged from their own frustrations trying to sell their own cars, particularly when potential buyers showed up late – or not all – for a test drive.
Carlypso co-founders Nicholas Hinrichsen, left, and Chris Coleman say their business concept was forged from their own frustrations trying to sell their own cars, particularly when potential buyers showed up late – or not all – for a test drive. Carlypso

Got a used car to sell? For most, that means negotiating a trade-in at the local dealership or trying to sell it yourself. Both scenarios can be time-consuming, frustrating and potentially risky, especially if you’re unacquainted with current vehicle values and DMV-required paperwork.

Enter a different solution: Carlypso.

Started last year by two Stanford University business school graduates, Carlypso is among a flurry of startup companies offering new ways to help consumers sell their used cars. With its website, a GPS tracking system and a secure “lockbox” for car keys, Carlypso takes on the car-selling burden, even scheduling test drives by potential buyers.

On Monday, the Bay Area startup will launch its service in the greater Sacramento area.

Co-founders Nicholas Hinrichsen and Chris Coleman, who graduated from Stanford last year, say their business concept was forged from their own frustrations trying to sell their own cars, particularly when potential buyers showed up late – or not all – for a test drive. That’s one of the biggest hassles their service is designed to eliminate.

In a phone interview, Hinrichsen, 30, said the pair raised $1.2 million from angel investors after graduation. The origin of their San Carlos-based company’s name: “We wanted something with ‘car’ in it and something that was fun and dynamic.”

Hinrichsen, who noted he’s putting in 80-hour workweeks, said much of 2014 was spent ramping up the company’s business model. Since getting under way in October, first in the Bay Area, then Los Angeles and Orange counties, the company has handled nearly 500 vehicle sales.

Hinrichsen said the push into Sacramento was a natural expansion into a strong car market.

“We were hearing a lot of demand for us there,” Hinrichsen said. By eliminating the hassles of private car sales, “We really can offer something that is safer and more convenient than selling your car yourself.”

Carlypso is just one of a recent rush of U.S. startups aiming to grab attention in the one-on-one car-selling market. The companies – with names like Carphoria, CarLotz, Beepi, Carvana and Tred – all share a common goal: to simplify the car-selling process by handling the sales, testing and document-filing chores that typically frustrate sellers in private-party transactions.

Carlypso claims that it can net sellers on average $1,500 to $2,500 more than they could get on a typical trade-in.

Here’s how it works: Car sellers enter their vehicle’s details – make, model and mileage initially – on Carlypso’s website, www.carlypso.com. Carlypso generates what it calls a fair market price, based on analyzing a nationwide database of vehicle sales, typically 1.2 million transactions a week. Once a price is established, Carlypso sends out an auto expert to inspect the car and clean it inside and out, if necessary.

To handle test drives by prospective buyers, Carlypso installs a device that enables it to track the vehicle by GPS. Sellers can park the vehicle where it’s convenient, such as at work. Potential buyers access the ignition key or fob by swiping their driver’s license or credit card.

Carlypso schedules the test drives, talks to prospective buyers and accepts offers, eliminating those that are low-ball. If a prospective buyer makes a fair offer, Carlypso advises the buyer on how to submit the required paperwork to the state Department of Motor Vehicles. For the seller, Carlypso says it can verify the buyer’s funding.

The company’s fee is 5 percent of the original sales price agreed to by Carlypso and the seller, with a $400 minimum. If the vehicle sells for more, the seller pockets the difference.

Hinrichsen said that about 85 percent of Carlypso’s business is in California, although it has arranged sales in states as far away as Maine.

The concept gets mixed reactions among some in the auto industry.

“From a convenience standpoint, it sounds pretty attractive,” said Len Brewster, a Detroit-based auto industry analyst. “As long as the device they use to keep track of the car when it’s being (test-driven) is foolproof, I’d say it’s a fairly promising business plan. It enables to seller to go about his business and not be constantly interrupted during the selling process.”

John Driebe, who sells Nissan, Infiniti and Mazda vehicles in the Elk Grove Automall and heads the ForAnyAuto Group, said he’s not familiar with Carlypso or its business model but expressed some concerns.

“If you’re selling a $20,000 car, that means they get $1,000 for starters,” he said. “You also don’t know what kind of people are getting into your car (to test drive it), what kind of insurance they have and what kind of financing and myriad other things.

As for the company’s claim that it can get better pricing than from a trade-in, Driebe noted that with so much price information available online, “It’s easy to see if a dealer is offering you a fair price.”

Call The Bee’s Mark Glover, (916) 321-1184.

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