Last April, inspired by the recent spike in demand for used cars—as well as a growing number of used-car owners looking to profit from that spike—
Jim Larson (MBA ’03), Todd Parker (MBA ’06), and Steven Branton (MBA ’09) cofounded Prime Vehicle Traders (www.primevehicletraders.com), based in Florida. It’s an innovative venture that’s designed to take the hassle out of the automotive sale-by-owner market. “Most people describe the process of buying or selling a used car as complicated or even scary,” noted Jim. He and Richard, who came up with the Prime Vehicle Traders concept, were friends and former investment banking colleagues. After some HBS networking, the two found Michael, who was working in McKinsey & Company’s automotive practice and had previous experience running multiple auto dealerships.
Here’s how Prime Vehicle Traders works. After agreeing to a target asking price, sellers pay an upfront charge of $199 to Prime Vehicle Traders, which then handles all the paperwork and headaches that typically accompany such transactions. Prime Vehicle Traders collects an additional $599 “success fee” only when a deal is complete. Since used and leased car resale values are so high, sellers typically make a few thousand dollars even after Prime Vehicle Traders takes its cut. “Once we realized that serving people—not selling cars—is the business we’re in, that established a basis for rooting all our decisions in creating a differentiated experience,” said Jim. “We’re pleased with how far we’ve come in a short time. Everyone seems to intuitively get the concept.”