Clutch takes the used car buying experience digital


Stephen Seibel, founder and COO of Clutch and Dan Park, CEO of Clutch at the Clutch warehouse in Toronto.JENNIFER ROBERTS/The Globe and Mail

Toronto-based technology company Clutch wants to reinvent the way that Canadians purchase used vehicles.

Given how agonizing the used car buying experience can be, it seems like a noble goal. In fact, it was a frustrating experience that drove founder Stephen Seibel to create the company five years ago.

Today, Clutch aspires to be the Amazon of pre-owned rides, providing a one-stop destination that allows customers to research and compare vehicles without the stress and worry involved with buying at a dealership or a stranger’s driveway.

“We are trying to create a better way that is more trusted and transparent and gives Canadians way more confidence around buying a pretty large ticket item,” says Dan Park, the company’s chief executive officer.

Mr. Park, a veteran tech executive and the former general manager and head of Uber Eats Canada, wants to making buying a used car about as easy as ordering a pizza. And unlike ordering a pizza, you can return the vehicle for a refund within 10 days or 750 kilometres.

What Clutch has going for it is its first-mover status as the first online-only auto retail platform, a large inventory of more than 1,000 cars and trucks, a buying format younger consumers are in tune with, and a sense of comfort they will not get in many traditional used-car deals.

That’s helped fuel a three-year growth rate of 1,287 per cent, placing Clutch in the 47th spot on The Globe and Mail’s Top Growing Companies list in 2021.

Besides the 10-day money-back guarantee, the company offers a free limited 90-day warranty and an optional vehicle protection plan for up to eight years.

“Every car that we have in our inventory, we have mechanics that are Clutch employees who have inspected the cars using a 210-point checklist and we do most of our mechanical work in house so that we can guarantee the quality of that vehicle,” says Mr. Park.

Clutch is ranked 47th on The Globe and Mail’s Top Growing Companies list in 2021.JENNIFER ROBERTS/The Globe and Mail

The company attempts to give browsers as close to a dealership experience as they can get online. Vehicle profiles often boast dozens of photos, the full inspection report (including minor scratches, dings and dents), its Carfax vehicle history report, a list of features, specs and no-haggle pricing.

Mr. Park likes to say that his company’s customers are “young at heart” and looking to save time and headaches of the in-person used-car buying game, though he acknowledges that they skew younger.

“We are certainly seeing more people that are young families in the millennial, Gen X type of generations where they maybe got a new job, a new house or are building a new family and they need a new car. We are also seeing a lot of customers that are new to Canada and may not feel comfortable or want to go to a dealership.”

Would-be buyers can book a test drive, however, Clutch would rather they “test own” a vehicle for the 10-day, 750-km period.

Buyers can reserve a car, complete the paperwork online and have it delivered as soon as the next day. The company offers free delivery if the vehicle and buyer are fewer than four hours’ drive time away. (If it is longer, a purchaser can agree to meet partway or pay for delivery).

Clutch got its start in Halifax and has now created an enviable geographic footprint, with 150 employees and operations in four provinces selling more than 1,000 vehicles a year. Currently, it sells to customers in British Columbia, Alberta, Ontario and the Atlantic provinces.

Being able to serve multiple provinces with a large inventory of used vehicles is a significant plus for the online seller over traditional dealerships, the Mr. Park explains.

“No used car is alike. You can have two black Camrys from the same year but because they are used, they are in different condition, have different mileage – they will never be the same – so having more selection and being able to access inventory that is not just local is super valuable.”

So, the Toronto buyer who finds his dream car in Halifax can buy it online, provided he is willing to cover shipping costs.

Just like at a dealership, Clutch offers financing options for purchasers, and they can even apply for pre-approval prior to selecting a vehicle.

Clutch drew its early inspiration from U.S. online platforms such as Carvana and Vroom, but Mr. Park says Clutch represents a distinctly made-in-Canada solution to buying used cars online.

“The Canadian market is obviously different – as much as Americans sometimes think we are the 51st state – we have our nuances. So, we are very much building a Canadian brand.”

The company has a comfortable lead on any would-be online competitors, and last year secured its first major financing led by a group of investors steered by Canadian venture capital firm Real Ventures to fund its expansion.

Clutch is 10 times the size it was just three years ago, and the $67-million in equity and debt financing it secured in 2020 will not be the end of its capital requirements.

“Delivering and selling cars is a capital-intensive business so we will continue to raise capital and continue to add selection,” says Mr. Park.

“We want to have the largest selection of used cars in the country which involves tens of thousands of vehicles. Just doing the math on 10,000 vehicles is $250-million.”

In this series, we ask some of Canada’s Top Growing companies to share advice on finding new and innovative routes to success in an unpredictable business environment.


Leave a Reply

Your email address will not be published. Required fields are marked *