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Highlights
- Pre-owned cars are becoming popular as a global chip shortage has affected the production of cars.
- The average list of used cars surged 27 per cent year-over-year (YoY) in November.
- As the IPO frenzy is expected to continue in 2022, let’s take a look at companies that could go public.
A global chip shortage has disrupted the automotive industry and has led to delay in the production of cars and almost any other product which requires a semiconductor.
It seems that the shortage of semiconductors is not ending any time soon, and this will increase the waiting time to buy a new car.
Due to this reason, the market of pre-owned cars is recording increased customers worldwide, including Canada. According to an AutoTrader report, the average list of a used car surged 27 per cent year-over-year (YoY) in November.
In this article, we will look at two Canadian auto companies that could opt to go public next year:
Clutch
The Ontario-based company is Canada's first online car retailing platform and in November, Clutch secured US$ 100 million financing in a Series B funding round led by D1 Capital Partners.
Founded in 2016, Clutch was started to provide an online platform for pre-owned vehicles in Canada. The company offers its services in British Columbia, Ontario, and four other provinces.
The world is witnessing a chip shortage and it started after the COVID-19 pandemic. As the Omicron variant is spreading worldwide, the chip shortage could continue next year as well.
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If this happens, then platforms like Clutch could get more buyers of pre-owned cars as there's a long waiting time for new cars.
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Customers can visit Clutch's website and access a massive collection of pre-owned high-quality vehicles at low prices. Notably, a car undergoes a 210-point inspection and is reconditioned at Clutch before it is ready to sell.
CarDoor
Based out of Toronto, CarDoor was started in July to simplify the process of buying cars. It offers its customers a complete purchase and delivery concierge service and gives a standard 14-day money-back guarantee.
In September, CarDoor raised US$ 3 million in a funding round, and it will likely use the money to expand its presence across Canada and its online platform.
As it is a relatively new company, CarDoor could opt for a public debut to raise quick money for expanding its operations and take maximum advantage of the global chip shortage by increasing its presence and sales.
CarDoor allows users to check its inventory online, exchange their current vehicle and get at-home delivery.
Bottom line
Often stock market investors keep a watch on private companies going public as the stocks offers a chance to get higher returns upon public debut.
Generally, the price of a stock increases when it begins trading in comparison to the pre-IPO price of a share.
However, it is not necessary as a company may fail to get subscribers for the pre-IPO stock and as a result, the stock could open lower at the time of debut.
