#Software

Automotive Technology

Auto dealerships are actively seeking technology solutions to help them improve the customer experience and re-invigorate high-margin operational areas. There is no question that the dealership model will undergo a period of change, adoption and experimentation before discovering the best way to use technology.

As LLR continues to track the AutoTech sector, we welcome technology companies and intermediaries working in this space to contact Cheng Li about relevant opportunities.

While many dealerships are now operating at pre-pandemic levels, they’ve discovered that changes in consumer purchasing habits have accelerated dramatically. It has served the industry a much-needed wake-up call that technology is integral to survival beyond the pandemic and to continued improvement of the bottom line.

Cheng Li, Principal at LLR Partners

What's driving growth in AutoTech?

Shift in consumer behavior to an online experience

Over the past decade, the AutoTech industry has witnessed a shift in consumer behavior, with a significant move towards online car purchasing. The rise of e-commerce platforms, advancements in digital marketing, and the convenience of researching and comparing vehicles online have reshaped how consumers approach buying cars, presenting a challenge for dealerships.

More informed buyers

Auto shoppers are spending significant time conducting online research, showing up to dealerships more informed on their car of interest and its fair price. Shoppers spend an average of 14 hours of online research during the car shopping journey, a third of which is on a mobile device.1 Dealers are working to optimize the mobile shopping experience to embrace this trend.

Unexpected profitability for dealers emerging from the pandemic

New car sales declined 15% in 2020 as a result of diminishing consumer confidence and economic conditions during COVID-192, which also presented a significant operational challenge to dealers. Yet, many dealerships had their most profitable years, driven by margins from used car sales and fixed operations/service departments.

Rise of auto tech adoption

The shift in consumer behavior towards an online car shopping experience creates an opportunity for dealerships to embrace technology and digital solutions. AutoTech caters to the evolving preferences of customers as well as helps eliminate disruptions in the supply chain.

Opportunity for improved retailing, operations, and technology

Traditional sales and marketing strategies of the past decade are no longer sufficient for dealerships to thrive in the modern automotive landscape. LLR recognizes that innovative auto technology can help empower dealerships to stay competitive, enhance customer experiences, and optimize their operations for sustained success in the evolving automotive industry.

Where LLR is focused on investing

As LLR looks at the auto tech market, we see valuable opportunities in used cars, fixed operations and the retail experience, but the long-term winners in this market will need to focus not only on innovation but on developing smart strategies, dealer retention, and enhancing the consumer experience.

A Dealership Model Disrupted

14 hours
1
average time spent researching online while car shopping
2%
3
of all car sales in Europe and the U.S are completed online
4x
4
size of the used car market compared to new cars

Get to Know LLR Partners

25 Years of Investing in Technology

  • Founded in 1999, LLR is a growth oriented private equity firm investing in high growth, disruptive technology companies.
  • Raised over $7.0 billion of capital across seven funds.
  • We are focused on organic, topline growth initiatives and complementary acquisitions to create value for all stakeholders.
  • Thesis-driven investment teams look to build fit-for-purpose strategies along side management teams.

Operational Support

  • Leverage best practices developed through codifying successful strategies across our 130+ investments since inception.
  • LLR’s Value Creation Team (strategy, talent, GTM, product, finance, M&A) to help accelerate growth.

Focus on Partnership

  • Flexible capital provider (majority or minority ownership).
  • Reward and motivate key players with equity.

Investment Criteria

  • Ability to invest $30 – $150M of equity.
Select Related Investments

LLR invests in the sectors where our investment experience indicates there are attractive business models and market trends supporting strong growth potential. Here are some of our related investments.

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Disruption in the Dealership Model is Fast-Tracking Growth Opportunities for Auto Tech Companies
Cheng Li / Principal

Meet the LLR Team

David Reuter

David Reuter
Cheng Li

Cheng Li
Devon Bembery

Devon Bembery
Edward McCann

Edward McCann
Ousmane Sow

Ousmane Sow
Trevor Mutolo

Trevor Mutolo
Evan Johnson

Evan Johnson

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References

  1. Pete Grieve. “Shopping for a Car Now Eats Up Nearly 15 Hours of Your Time, on Average,” Money, 2023, https://money.com/how-much-time-buy-car-report/
  2. Nick Martin. “Will buying cars online really take off?,” DW.com, 2022, https://www.dw.com/en/will-buying-cars-online-really-take-off/a-61676761
  3. Craig Cole. “The coronavirus pandemic slashed new car sales by 15%, forecast says,” CNET, 2020, https://www.cnet.com/roadshow/news/coronavirus-pandemic-new-car-sales/
  4. Nandini Sen Gupta. “Used car sales grow 4x new ones,” India Times, 2019, https://auto.economictimes.indiatimes.com/news/used-car-sales-grow-4x-new-ones/68859244
Disclaimer:

The information presented herein is intended for an audience of potential LLR portfolio companies and the intermediaries supporting their capital raise processes. Named LLR investments presented herein do not reflect a complete list of LLR investments and are provided for informational purposes only. Certain statements about LLR made by portfolio company executives and other quoted parties herein are intended to illustrate the work of LLR’s Value Creation Team with such portfolio companies or reflect the individual’s perspective on the featured industry sector. Such portfolio companies are controlled by investment vehicles managed by LLR. Quoted parties were not compensated in connection with their participation, although they generally receive compensation and investment opportunities in connection with their portfolio company or Senior Operating Advisor roles, and in certain cases are also owners of portfolio company securities and/or investors in LLR-sponsored vehicles. Such compensation and investments subject participants to potential conflicts of interest in making the statements herein.