When the Covid-19 pandemic struck, it upended industries across the globe. Amid the chaos, the car resale market experienced an unexpected boom, with the value of used cars soaring due to a severe shortage of new vehicles.
This shortage was largely driven by a disruption in the supply of essential components, such as microchips, while the Suez Canal block and other logistical challenges hampered the movement of cars.
As consumers turned to used cars, it accelerated the growth of a small number of existing car resale companies, which were, for the most part, just spluttering into life. One of these was the British company Motorway.
Since its inception in 2016, Motorway has rapidly grown to a team of about 500 people and sells around 1,000 cars a day.
With over 5,000 car dealers using the platform, it has sold more than 0.5m cars to date.
The story might sound familiar. Cazoo, which amassed an $8bn (£6.1bn) valuation in just three years, also saw a meteoric rise during the pandemic years.
However, this came to a crashing halt when it collapsed into administration in May.
Tom Leathes, Motorway co-founder and CEO (Image: Motorway)
But Tom Leathes, co-founder and chief executive of Motorway, puts his company’s success down to a fundamentally different business model.
Unlike Cazoo, it does not actually buy and sell cars.
Instead, Motorway operates as a car marketplace, connecting buyers and sellers through an online platform. “This allows us to scale much more rapidly and efficiently,” he explained.
The company currently handles about five per cent of all used car sales in the UK.
Now, Leathes wants Motorway to become the best place to sell a car in the UK. “Our primary goal is to grow our market share and ensure that we’re servicing as many consumers and dealers as we can,” he told City A.M.
Motorway aims to solidify its position here before considering international expansion. “Things are a little bit more stable now, after all that post-Covid stuff,” Leathes said. “But a lot of the behaviours that changed during that period have very much remained.”
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Despite a current slowdown in the used car market, the car resale industry is huge. In the UK alone the market is worth £100bn, with 8m cars sold every year.
Motorway claims its efficient market matching process typically nets sellers over £1,000 more than they would get through part exchanges or trade-ins.
This approach involves running instant online auctions for vehicles, which ensures that the car dealer willing to pay the most for a specific car wins the bid.
“We find the one car dealer in the country who really wants that vehicle, often with a customer in mind, and so is able to pay much more than a random place you might drive your car into,” Leathes said.
The serial entrepreneur, who attributes Motorway’s success to previous mistakes, believes in the importance of a strong business foundation before venturing globally.
“Our long-term vision is absolutely to become a global success,” he said, “but you have to get the fundamentals right. You have to do one thing really, really well in a market that really needs that…before you begin that global expansion.”
Beyond business strategy, Leathes is passionate about the role of government in supporting fast-growing British tech businesses like Motorway.
The UK has many exciting companies but very few global standout successes, he said, “and that’s a problem.” To address this, he is advocating for better employee incentives and a more open country for the best talent to move to the UK and build their careers.
As Motorway continues to scale, attracting top talent remains a priority. “We need to be able to attract the absolute best talent in the UK to our business because that’s how we’ll succeed,” Leathes said.