“A real innovation on the German used car market”

ERGO and nexible have been cooperating since mid-December with British online car dealer Cazoo. But how exactly do we envisage this kind of cooperation on the used car market in Germany – and how does this deal fit in strategically? In this interview, Karsten Crede, member of the Board of Management of ERGO, and Jonas Boltz from nexible’s board of management, answer these and other questions. 

Herr Crede, since mid-December, ERGO, nexible and British online car dealer Cazoo have been cooperating on the German used car market. But just how will the new cooperation work in practice?

Karsten Crede: At ERGO Mobility Solutions (EMS), we have developed a new product. Our new Easy Start Insurance allows Cazoo customers to buy their used car with motor insurance included. This means that the vehicle automatically enjoys comprehensive cover within a few days of purchase. What’s more, the Easy Start Insurance is fully integrated into Cazoo’s digital process, so the customer has only to tick a box in the offer process if they wish to avail themselves of it. There is no need to enter any other information. 

Not only is the new offer optional and straightforward for Cazoo’s customers, it also comes at no charge – because the initial insurance cover is paid in full by Cazoo. For purchasers of used cars, this turns the transaction into a one-stop shopping experience, allowing them to focus entirely on enjoying using their vehicle in the first few days after delivery.

And what part does nexible play, Herr Boltz?

Jonas Boltz: The idea behind the cooperation with our EMS colleagues is that we try to persuade Cazoo customers to take out our nexible all-in-one policy as a permanent follow-up cover once the Easy Start Insurance has expired. To this end, we have jointly developed a special application process with Cazoo, allowing us to offer an optimised digital service experience. Cazoo customers thus benefit from our fully digital, fair and flexible insurance, which offers excellent value for money. 

What does the new cooperation mean for nexible in terms of strategy?

Jonas Boltz: Along with our colleagues at EMS, we are developing a digital performance promise, bringing together the automotive expertise and market access of EMS and nexible’s digital expertise. We believe it’s a very promising mix! We see the cooperation with Cazoo as a first proof point for this. The application process we developed in this instance is also very easy to adapt for future partners.

And what does the new deal mean for ERGO in terms of strategy, Herr Crede? How did it actually come about?

Karsten Crede: Online trade is something that is completely normal today for a wide range of goods. In recent years, an increasing number of vehicles have been sold online – in some cases by the manufacturers (OEMs) themselves in direct sales, and in other cases – mainly in the used car segment – by independent platforms like Cazoo. Models of this kind are already better established in China.

We are unable to say with any certainty how great the potential is for sales of this kind in Germany and in Europe. But one thing is certain: cars and insurance have always been closely connected. As well, the sale of motor insurance at the point of sale (PoS) for the car is standard practice. And for us, it makes no difference whether this PoS is in the physical dealership or in the digital world! So the objective for us was really to simplify the acquisition process – both with regard to the vehicle and the insurance cover for it.

And with regard to your question on strategy, I would like to emphasise one thing. Integrating the new Easy Start Insurance into the digital purchase as an initial insurance cover is a genuine innovation on the used car market in Germany and thus represents a further milestone in our ESP2 strategy programme. As part of this, we have stated our intention of becoming a digital leader in the insurance sector by 2025.

Another significant aspect in this case is that we succeeded in realising significant synergy potential under the umbrella of ERGO Digital Ventures. Even though we discovered a profitable use case in this instance, we still intend to find and implement further synergies. We see considerable potential, particularly in relation to IT topics.

Herr Boltz, Herr Crede: Can you give us a brief forecast – what is the next step on the agenda?

Karsten Crede: We would like to strengthen the cooperation with Cazoo – whether this involves creating additional insurance solutions or developing additional markets. And, of course, we are intensifying our collaboration with nexible. The follow-up insurance described by Herr Boltz is only a prime example of this. In addition, we are engaged in very productive discussions and see various promising touchpoints to further align our two business models, both of which have a strong digital character. In nexible and EMS, we have two powerful and innovative teams who are working together to secure further partners for us and make the most of new sales channels.

Jonas Boltz: I would heartily agree with Karsten Crede on this. We work together superbly as a team and together we will be exploring more market opportunities. But for now, we are delighted to get things up and running, and are looking forward to obtaining feedback from our customers that will allow us to improve our processes even more!

Interview: Ingo Schenk