Building the used-car buying-specialist model, and a record-fast listing (2003)

The courage to narrow to a single business — and its price

The heart of this decision was not broadening the base of the business but narrowing it to a single point in used-car distribution — buying. Out of the failure of his own bankruptcy, Kenichi Hatori saw more opportunity in sourcing cars and turning them over than in selling them across a shop counter. He read the seller’s psychology — the wish to let a car go without being seen doing it — and built a model that cleared trade-ins through auctions. A system in which headquarters set the price and even an amateur could appraise was inseparable from the fastest possible national rollout by franchise. What marks this founding is that it translated one individual’s on-the-ground experience into a business that an information system and a store network could reproduce.

Yet the strength of narrowing to a single point was the flip side of a weakness to the business cycle and the sourcing environment. The volume it bought stayed only a small part of the whole used-car auction market, and manufacturer-affiliated dealers such as Toyota also moved into buying. After listing, the company broadened into retail, subscriptions and overseas, and in 2016 changed its name from Gulliver to IDOM. What a company that had climbed to a record-fast listing by concentrating on one business was next forced to confront was the question of how far to loosen that concentration and widen its trade. The thoroughness of a single model, and diversification beyond it — this founding carried the tension between the two from early on.