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Digital transformation

How Startups Are Changing the Auto Industry

Jennifer Gustavson
February 15, 2022
5 min

As we find ourselves in an age that's dependent on technology, the modern consumer has more ways to shop than ever before. Each step of the buying process — from discovery to research and beyond — is supported by more data and innovative, online buying experiences.  

Startups are leading the way with innovation, and the resulting technologies touch every industry. Let's take a look at how startups have changed the auto industry in particular. 


Car shopping used to be about grabbing an auto sales catalog or flipping through the used car section of the classified ads. Today, car buyers have many tools to research and buy the car of their choice. Companies like Carvana have broken car shopping down into digestible, organized, easy-to-navigate steps and have scaled car sales in the process. 

Online car research serves two primary functions: first, the time, energy and monetary investment saved by sparing a visit to the dealership is a massive advancement of auto sales startups. Second, online car buying opens up myriad shopping options, allowing potential buyers to view different colors, styles and extras with the click of a mouse.

Test drive

Startups are changing test drives, too. Remote test driving was already in full swing before the pandemic, but contactless test drives picked up significantly due to COVID-19. Shift developed a business model where customers can have a car dropped off, wiped down and take it for a test drive before returning it to the delivery agent.

As virtual reality (VR) continues to expand, so do test driving options: VR is now being used to transport viewers to virtual showrooms, giving them the remote experience of walking through location-specific destinations. Auto manufacturers are beginning to operate with startup-like innovations. For example, BMW has created apps for buyers to customize their potential new car. They can even interact with the vehicle on any device, allowing the car-curious to get a sense of a vehicle in the comfort of their own home.

Point of sale

Paying for a car is now easier than ever, too. Digital finance has opened up new ways to pay, giving new buyers a chance at car ownership. While dealerships and auto manufacturers have been using digital financing tools for years, Caribou scales the car buying experience by providing a platform for car buyers to finance and refinance their cars — all online. And it wouldn't be a conversation about digital finance if we didn't mention NFTs: car sellers are already using the new blockchain technology to sell vehicles and include innovative add-ons.

As part of the purchasing process, contracts have to be signed and documents need to be notarized. The Notarize platform is making this easier for car dealerships and their customers, with eSignature capabilities and online notarizations that can be done from anywhere, at any time. This helps make the car buying process a seamless digital experience that allows customers to purchase a vehicle from their couch — or wherever they are.

Internal technology

There are a multitude of auto tech startups that are changing the way consumers interact with their cars. One example is Indi EV, which has just come out with a prototype of “the world’s first social media-oriented car.” It seems to provide consumers with the ability to work and play in their cars — with a Windows workstation and integrated computer gaming.

Even major companies like Amazon are innovating the way we experience our cars. The business behemoth recently announced that after a successful launch of its Fire TV technology in the Jeep Wagoneer and Grand Wagoneer, it would be expanding the service to include additional makes and models. While avoiding creating more driving distractions, auto manufacturers are looking toward a driving experience that makes navigation, operation and passenger entertainment more engaging. 

What's next? 

Startups have been a driving force in changing commerce. In the auto industry, that means a better experience for shoppers, sellers and manufacturers. Gone are the days of picking up a newspaper, finding the car ads, calling a dealership and making a visit. From the privacy of their home ( and mostly on the phone in their pocket), car buyers can research, customize, test drive and purchase a vehicle. It's hard to know what's going to come next, but startups will surely be at the forefront.


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Jennifer Gustavson

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