LONDON, February 9, 2018 /PRNewswire/ --
New technology is coming to the $2 trillion automotive industry in a big way - and smart investors are finding the top companies that could profit from it. In 2017, 94.5 million cars were sold world-wide and demand for light vehicles in every consumer market is soaring. Included in today's commentary: Shopify Inc (NYSE: SHOP), The Descartes Systems Group Inc. (NASDAQ: DSGX), EXFO Inc (NASDAQ: EXFO), Intel Corporation (NASDAQ: INTC), Applied Materials Inc. (NYSE: AMAT)
Everyone wants to buy a car. And the industry is expecting another strong year in 2018. But nobody likes to buy a car. Why should they? The current process is inefficient, unnecessarily expensive and time consuming.
Now, one little-known company is using new technology to cut out the middle man and has the potential to create new profits for the global automotive industry. In other words: Why should the middle men get the money, when the automotive industry itself can capture more profits using the right technology?
PowerBand Solutions (PBX.V) is adapting this cutting-edge tech to automotive sales. And they have some of the biggest partners in the industry.
These include partnerships with auto dealers and cooperation with firms like Route One, PBS, Quantech, Dealer Socket and more. PowerBand Solutions aims to eliminate the costly added fees and lengthy paperwork that go into each auto purchase.
And the potential is huge. By cutting out the middle-man through its fintech technology platform, PowerBand will reduce costs and save their clients between $400 and $1000 on new car sales, and could still realize a profit margin of as high as 69 percent on certain vehicles.
The tiny $10 million cap PowerBand could be worth much more as some of that profit flows back to them for their technology as expected.
Here are five reasons to look at Powerband Solutions (PBX.V) more closely:
#1 Massive Opportunity
The auto industry is an international behemoth. Each year more than 90 million cars are sold all around the world, and demand is still rising.
The biggest auto companies, like Toyota, Volkswagen, General Motors and Fiat Chrysler regularly report billions in profit each year.
In the United States, 5 million new cars and 12 million used cars are sold each year, for a total sale of 17.1 million cars in 2017.
But there's a lot of waste hidden inside those sales.
The middle man, third party resellers, large auctions, siphon billions off the market in hidden fees resulting in higher cost for all
Taken across the whole industry, there's $17 billion up for grabs. That's a massive opportunity for a company savvy enough to tackle the problem.
#2 "Stuck in the Middle With You"
Buying a car, as everyone knows, can be a long, laborious process. That's because the middle-men have loaded it down with hidden fees.
Some of these fees are necessary for dealers to cover the cost of processing the purchase. That's because most dealers are STILL using pen-and-paper contracts, with page after page of contracts that need to be processed.
This fee has nothing to do with the value of the car.
Instead, it goes towards paying the costs incurred by the middle-man from admin and advertising.
Included in this cost is the car's documentation fee (or "doc fee"). Dealers charge a different fee depending on the state, but it can range from $75 in Oregon to $799 in Florida, according to on-line auto dealer Edmunds.
The doc fee averages $400, and is often negotiable for purchasers. That's because in most cases, it's just an added fee dealers tack on to cover their additional costs.
But in other cases, the fees are non-negotiable. Dealers won't budge if consumers try to talk them down to a lower fee.
Together with other assorted fees, the doc fee can add anywhere from $400 to $1000 to the total purchase price of a car.
#3 A Creative Solution
PowerBand Solutions (PBX.V) applies new technology to streamline the auto purchase process.
By cutting out added costs, eliminating administrative waste and removing the need for added fees, as an auction software platform, PowerBand will assist dealers and OEM to dispose of their assets through their buying network, taking on the $100-billion auto-auction industry head first.
PowerBand has developed software that allows for faster, easier and more streamlined auto purchases, both through on-line auctions for individual buyers and sellers and for dealers, rental car companies and fleet purchasers.
The company has a transaction-based model that charges a total $200 fee from buyers and sellers utilizing the platform.
This is significantly less than the $400-$1000 auction houses usually charge.
PowerBand is also mastering control of information. The company has developed a standardized electronic appraisal system, one that provides up-to-date information on cars, increasing transparency.
PowerBand intends to apply blockchain technology to its platform. Use of blockchain is intended to help certify vehicle history, financing, mileage, servicing, accidents and more.
#4 Revving the Engine
With this technology in place, PowerBand (PBX.V) could be ready to take off. All it needs to do is slide the key into the ignition and start revving its engine.
Quantech Software Inc. signed an integration and revenue sharing agreement with PowerBand, linking PowerBand's auction software with its own dealer management system.
Several other firms have signed on to use PowerBand's tech, as well.
PowerBand has agreement with Dealer Socket, which operates in 700 dealerships in Canada and over 10,000 in the United States. The company will use PowerBand's Auction software to streamline its processes and save money along the way.
As of November 2017, 125 unique customers had signed on to partner with PowerBand, representing a compound growth rate of 15 percent per month since July 2017.
Based on this dynamic expansion, PowerBand projects a growth curve from $2.2 million in 2018 revenues to $61 million in 2021 if Powerband can capture approximately 2 percent of the vehicle auction market.
The company has already finished $8 million in financings to date and doesn't expect to have to raise much more cash since operations are expected to yield a positive cash flow.
The transaction cost model generates a profit margin of up to 69.7 percent, meaning, and PowerBand hopes to have over 1,000 dealership customers by 2021.
PowerBand is looking at the kind of growth potential you usually see in very fast-growing firms, as their current projections show. They have a real shot at making their projections, based on early results.
And in preparation for Phase 3 of its future plans, Powerband has had discussions with IBM (Blockchain-as-a-Service) to develop an automotive industry blockchain platform for certifying vehicle history, financing, mileage, servicing, accidents etc.
And with blockchain in the mix, investors tend to get excited. Recently, companies that buy into blockchain or crypto-currency immediately see their share price expand.
#5 Time to Take Off
The auto industry is worth an estimated $2 trillion and is wide open to disruption.
Innovative companies like PowerBand (PBX.V) can upend the traditional way to buy and sell cars, eliminating billions of dollars of unnecessary cost.
Through their partnerships with firms like Route One, Dealer Socket, Quantech and PBS, PowerBand technology expects to soon be rolling out through North America. This breakthrough will make buying and selling autos easier than ever.
To imagine the potential here, consider Trade Rev, another auto disruptor. Trade Rev was entirely bought out by KAR Auction Services in October 2017 for $50 million in cash; an additional $75 million will be paid out over the next four years.
"The digital revolution in remarketing has begun," announced the CEO of KAR. The deal lifts TradeRev's total value to $150 million.
Powerband could attain that same success, or could rise even higher, even faster, if everything it has planned works out.
With only a $12 million market cap, this small company aims to have access to thousands of auto dealers throughout North America. It's utilization of integrated technology sets it above the rest.
And its revenue projection is to increase by 3000 percent in the next three years. That would put it in a different league.
By cutting out the middle man, PowerBand (PBX.V) could revolutionize auto dealing.
Investors should jump on this blockchain revolution, before this little company shifts into high gear and really takes off.
Other companies gaining a leg up on the competition using technology:
Applied Materials Inc. (NYSE: AMAT): Up around nearly 8% over the past month, AMAT is one of the top-performing stocks in the tech sector and it's got strong fundamentals to support this bull run. Catalysts are mounting, particularly with an inflection-focused innovation strategy driving growth steadily.
Intel Corporation (NASDAQ: INTC) is a leader in multiple fields of technology. The forward-thinking industry giant is the backbone of many laptops and PCs running the Windows operating system. The company has been so successful in its deal-making and advertising that it is impossible to escape its influence.
EXFO Inc (NASDAQ: EXFO): EXFO isn't new to the Canadian tech sector. The company was founded in 1985 in Quebec City, and its original products were portable testing products for optical networks. Since then, the company has acquired and build 3G, LTE, protocol, copper/xDSL, IMS, and VoIP test and service assurance products. Recent developments from EXFO are promising for long term growth potential.
The Descartes Systems Group Inc. (NASDAQ: DSGX) (commonly referred to as Descartes) is a Canadian multinational technology company specializing in logistics software, supply chain management software, and cloud-based services for logistics businesses. The company is making waves in the tech industry with its futuristic products and visionary leadership.
Shopify Inc (NYSE: SHOP) is a Canadian e-commerce company with more than 500,000 companies rely on Shopify's real-time e-commerce, including Tesla, Budweiser and Red Bull, among many others. Shopify manages their e-commerce machines, and its stock is now up to over $106 right now, with a market cap of over $10 billion.
By. Ian Jenkins
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