How to build a startup in the automotive industry — from Parkopoly’s co-founder

We had a talk with one of the talented co-founders and CTO of Parkopoly Arthur Darde. Parkopoly is our partner and client for more than 3 years now. From the very beginning, none of the co-founders had experience in the automotive industry. Despite this fact, their revenues reached €5 million in 2021. You can watch the full video with the presentation and a Q&A session afterwards or read the story on behalf of Arthur below.

What is Parkopoly

Parkopoly is an automotive startup from France. We are a B2B2C business that provides car transportation services. We work on all levels of the automotive industry: with manufacturers, retailers, rental businesses. 

How it works:

1. Freelance drivers register on our platform and then can perform various tasks with a car. For example, cleaning, after-sales service, car delivery from A to B, handover for new cars, etc.  

2. We have a contract with a manufacturer, let’s say, Renault.

3. They can either order car services themselves or offer them to the final customer as a part of their services. A customer might even have no idea he is serviced by Parkopoly. 

4. Final customer is linked with a freelance driver to delegate driving a car to after-sale services, cleaning, parking, and repairs.

5. Drivers can access jobs through a cross-platform app with a simple calendar showing them all of the upcoming jobs. 

6. When the driver arrives at work, they can use our app to start the car inspection and can log all of the relevant information there. Inspection is run again in the garage and near the customer’s place. The process includes navigation, making and uploading the car photos to the app, documents scanning, digital signatures. 

7. The payment stage is simple too. Drivers receive invoices from Garages, enter the amount into the app and the customer can pay by cheque, in cash, or by bank card when the driver drops the car back to them.

How the automotive project is started

From the very beginning of my career, I have been passionate about global warming mitigation, stable energy, and energy transition topics. 

For about 10 years I was working with large engineering groups on energy conservation projects. Choosing the automotive industry for my business, I thought I would be able to participate in positive changes for the environment there. We all need a new business model to sell cars, to maintain them, to make them available.

In 2015 my friends and I started actively working on Parkopoly. After a chat with a friend working for a car OEM (Original Equipment Manufacturer), we were drawn with the idea of driving a car for servicing. 

In the beginning, our company consisted of 4 people. None of us had relevant experience in the car or IT industry, as well as in starting up a business. However, we had good analytical skills, a background in managing a team, etc.

startup in the automotive industry

Why we are partnering with Digis

When we start building a development team we face such challenges with hiring an in-house team in France:

  • developers like joining teams with a tech guru and/or other developers. So they can learn and it will improve their CV. As a young company, we couldn’t offer it to engineers
  • long hiring time from 4 to 6 months and 3 months period to understand whether the person is actually good and suitable. 
  • we needed a big panel of expertise: DevOps, security, architecture, frontend, backend, etc. Imagine how long it could have been with usual hiring!
  • Being an engineer but not tech-savvy, I know what should be done but do not know how exactly and in what order, what is really required, or what is nice to have. So we were in need of a project manager and experienced engineers’ guidance. 

We were looking for a bigger company who could provide us with specialists who would work directly with me. 

How Digis solves the challenges:

  • attracts new people more easily
  • their developers train and stimulate each other to learn faster, even if not working on the same project
  • has specific talents, that you can leverage for the short-time missions, for example, DevOps
  • provides us with their tech vision, so we can focus on business logic.

What pitfalls we face as a startup

1. We were right that the automotive industry needs innovation. 

BUT it turns out that:

  • people service their cars once a year, so it is acceptable for them to visit a Garage
  • Garages do not care much about customer satisfaction
  • most people in France have low service expectations and won’t pay someone to care for their cars.

2. Trusting people’s words because we liked what they say was not a reliable tactic.

Our experienced partners told us that we will have a lot of customers since their clients are driving luxury brands and will be ready to pay for our service. And we never checked if it was true.  

Finally, we ended up with customers who didn’t need our service. 

3. Thinking that our customers (manufacturers and retailers) know how to sell our service. 

When we started it appeared that most bookings were made through mobile. It means that final customers (car owners) talked to call center employees, who were not incentivized to sell our service properly. We tried to train them, but there was a huge turnover and we came nowhere. 

Result: after 3 months of such work, we had 3 customers, and invoiced €120 euro. After 9 months our monthly income was >€7000. We had burned €250k in salaries and development costs. 

Upgrade 1

1. We convinced several dealers that they would attract more customers by giving our service for free. 

2. We convinced dealers to give priority booking slots (shorter delays) to customers that went through our service. 

3.  We set up a bonus scheme for the phone operators that «sold» our service the best. 

Result: this helped us a little.

startup in the automotive industry

However, our mistake was that we trusted early success signs.

Here is why our adverse actions did not bring us to stable profit:

  • Most dealers weren’t able to leverage our service to increase sales and so stopped paying for it
  • Most phone center agents didn’t care much for our bonus schemes
  • We wasted a huge amount of our time talking to dealers (and their call centers), which wasn’t scalable

Result: by mid-2019, we were barely at €50k/month and our growth rate was close to 0. 

Upgrade 2: what we have now

1. We convinced dealers to sell our service package with cars. We supposed that when a person buys a car for 22 000 euros, there is no problem to pay 200 more to have an option not to go to the workshop any more during 2-3 coming years.

2. Last year we grew a lot despite the COVID stuff, thanks to our other businesses

  • We are an operator for car-sharing companies. We do everything for electric cars: we charge them, we clean them, we move them to relevant places. It is a big market with big contracts — 1 is about €3-5 million a year. 
  • Another big project is test drives. For example, on behalf of big manufacturers, we organize test drives of electric cars which are sold completely digitally. 
  • We are partnering and planning to expand the direction with leasing companies. So they would not limit themselves to funding of a car but offer more services. With our tools, we can help with the implementation of new services without increase of the workload on their staff. 

3. We employ no-code and low-code platforms to create and test new solutions faster.

We have a lot of ideas and opportunities in the automotive industry. But it is very hard to focus on several businesses and we have already been doing too many things. So we do not try to be everything for everyone. 

Results: We expand the number of our potential customers with the following tactic: we adapt the tools we already have to customers’ IT, so we can help in multiple business areas from carsharing to after-sales.

We are reducing our customers’ back-office tasks related to these services by over 90% and new concession’s onboarding time from 3 months to 2 hours.  

Our revenues have grown 400% in the last 24 months and reached €5 million in 2021.

Advice to newcomers: why to start a company

  • To solve a meaningful and current problem, especially meaningful for you
  • To feel that everything is in your hands
  • To learn a lot from practice and get a unique experience
  • Starting a company is not the best way to get rich. It should not be your main motivation

I have never thought about quitting. I always chose to remain, hang on and fight. But I can say that you should be prepared that a lot of successful stuff happens only with luck.

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