What Is Rodo?
Rodo is an online service that facilitates the purchase or leasing of vehicles without the need to go to a dealership. Through its website and smartphone app, Rodo offers a choice of thousands of cars across 33 major brands, "crystal clear pricing, with all discounts, taxes and fees included," plus the option of delivery directly to the customer, possibly on the same day as when the order is placed. Rodo's smartphone app is available through the Apple Store and Google Play.
Launched in 2016 as Honcker, the company changed its name to Rodo in 2019. Founder and CEO Nathan Hecht is betting on car shopping becoming increasingly digital, what he calls a "paradigm shift" in how American consumers buy vehicles. He has stated a goal of having 3,000 dealerships signed up to sell through Rodo by the end of 2020.
Key suppliers of venture capital to privately owned Rodo include IAC/InterActiveCorp (IAC), Evolution VC Partners, and Lead Edge Capital. IAC is the parent company of the Dotdash family of websites, which includes Investopedia.
KEY TAKEAWAYS: HOW RODO MAKES MONEY
- Rodo, formerly called Honcker, facilitates online sales of cars.
- While use of the Rodo app is free to consumers, participating car dealerships pay a fee to Rodo for each sale or lease agreement completed through it.
- Consumers also can sell or trade in their own cars through Rodo, or terminate existing leases early.
- Rodo has a partnership with used car seller Carvana.
- Carvana pays Rodo for cars sold to it via the Rodo app.
How Rodo Works
Users must create an account with Rodo, providing basic personal information. Based on this information, Rodo will provide "real and personalized prices for actual vehicles from your local dealerships."
Prices are updated at the beginning of each month. Since the cars sold or leased through Rodo come from actual dealerships, there may be different prices for each model, depending on the dealership. Different users may be quoted different prices for the same vehicle, "based on various factors such as location, credit, applicable rebates, timing, and more." Also, while Rodo is designed for "no haggle" pricing, users can attempt to negotiate better prices with dealers through the app.
After completing a purchase transaction through Rodo, the customer has the option of picking up the car in person or having it delivered. However, if the customer resides in a rural area or more than 25 miles from the dealer, he or she may have to pick up the vehicle at the dealership.
Users also can sell or trade in a car through the Rodo app. The app also permits users, in most cases, to terminate an existing auto lease agreement early, if it is within six months of expiration.
Shortly after registering, Rodo will conduct a "soft credit check" on the customer, which gives the company an "auto-specific credit score without showing up on your credit report or impacting your credit score." However, once the customer enters an order and uploads the various documents required by the dealer to complete the transaction, he or she also must fill out a credit authorization form which authorizes the dealer to perform a hard credit inquiry.
Test Drives and Returns
One downside of ordering a car through Rodo is that the user cannot arrange a test drive. However, at the time of delivery he or she may have the vehicle returned at no cost if dissatisfied for any reason, including after taking a quick "drive around the block."
How Dealers Benefit
Rodo's pitch to dealers is that they can use this channel to increase sales at relatively low cost, while continuing to have control over the pricing terms. The Rodo dealer Dashboard, meanwhile, offers participating dealers real time intelligence on pricing compared to the competition.
As Rodo CEO Nathan Hecht stated in a press release: "Local dealers are a vital part of our platform. We're focused on making it easier for dealers to grow their own sales while lowering their overhead. These partnerships are also the reason that all of the vehicles on Rodo are actually available in real-time at the best price." He added, "That's not always the case in this industry, where many players are simply generating leads on vehicles that may or may not be on the lot and pricing remains ambiguous."
Rodo's Revenue Streams
While use of Rodo's app is free to consumers, dealerships pay Rodo from $299 to $499 for each completed lease. Additionally, Rodo has a partnership with used car retailer Carvana Co. (CVNA) by which consumers sell cars to Carvana through the Rodo app, while leasing a new vehicle via Rodo. The fees collected by Rodo from Carvana under this agreement are undisclosed.