Canada Drives Raises $79.4M to Expand Online Car Buying

Canada Drives Secures $79.4 Million to Expand Online Car Sales Nationally

Canada Drives, a platform facilitating online car shopping and delivery, has announced a Series B funding round totaling $79.4 million (equivalent to $100 million CAD). These newly acquired funds will be strategically allocated to broaden the company’s service reach throughout Canada.

From Financing to E-Commerce

Initially established in 2010 as a car financing provider, Canada Drives transitioned into an e-commerce platform for pre-owned vehicles in the previous year. Currently, the company’s operations are concentrated in British Columbia and Ontario.

These two provinces collectively represent approximately half of Canada’s population, as indicated by the 2016 census. Co-CEO Cody Green anticipates expansion into Alberta within the coming month, leveraging the benefits of this recent investment.

The Rise of Online Car Buying

The COVID-19 pandemic significantly accelerated the adoption of online shopping across various sectors, and the automotive industry is no exception. The emergence of platforms like Canada Drives, offering both shopping and next-day delivery options, is poised to fuel continued growth in this market.

Consumer preference is shifting away from traditional dealership experiences. Recent research from J.D. Power reveals that customers are increasingly drawn to digital car sales to circumvent direct interactions and negotiation tactics.

The convenience of completing paperwork and securing financing from home is also a key driver. Furthermore, shoppers are more inclined to purchase additional features when afforded the time to browse without the pressure exerted by sales representatives.

Canada's Emerging Online Car Marketplace

While the United States has witnessed substantial growth in online car shopping platforms such as Carvana and Vroom, Canada has experienced a comparatively slower pace of development. However, companies like Canada Drives and Clutch, which recently secured $20 million CAD in seed funding, are demonstrating a growing awareness of this proven business model.

The ongoing global chip shortage is also contributing to increased demand for used vehicles, as the cost and availability of new cars become more challenging.

Future Plans for Canada Drives

Canada Drives intends to utilize the recent funding to further refine its product offerings, expand its vehicle inventory in both existing and new markets, and recruit approximately 200 new employees over the next year.

Priority will be given to hiring within the product development team, as stated by Green in an interview with TechCrunch.

Inventory and Customer Experience

The company maintains ownership of its entire vehicle inventory. Each used car undergoes a rigorous certification, inspection, and reconditioning process before being stored within the company’s operational zones.

Upon purchase, vehicles are delivered directly to the customer’s location. Customers benefit from a seven-day trial period, with the option to return the vehicle without any complications if it does not meet their expectations.

Embracing Electric and Hybrid Vehicles

Green anticipates a growing presence of hybrid and electric vehicles on the platform. A company spokesperson confirmed to TechCrunch that Tesla and Nissan Leaf models are already experiencing significant customer interest.

With Canada’s stated goal of phasing out internal combustion engine vehicle sales by 2035, the future composition of the used car market remains uncertain. Currently, approximately 5% of Canada Drives’ inventory consists of hybrid or electric vehicles, according to Green.

“Our mission is to be the easiest place to buy or sell your car in Canada,” Green explained to TechCrunch. “As consumer preferences change and as countries adopt forward-thinking policies with electric and hybrid, our platform is going to be able to evolve with that.”

He further noted that the platform is already well-positioned to cater to the growing market for used electric vehicles compared to the average Canadian dealership.

Total Funding and Investors

This latest funding round brings Canada Drives’ total funding to approximately $159 million ($200 million CAD), following a $100 million CAD Series A round completed in 2019.

The Series B round was spearheaded by Jeffrey Housenbold’s Honor Ventures, with participation from KAR Global and other strategic investors.

Note: A previous version of this article incorrectly stated that Canada Drives sells both new and used vehicles. The company exclusively offers used vehicles.