Carwow, the UK independent online car buying website, has attracted £25 million in investment led by Mercedes-Benz parent company Daimler AG, as part of a strategic round of funding.

This investment is the first time Carwow has opened up to strategic investors.

The capital will be used to accelerate growth in the UK, as well as German and Spanish markets, with investment in recruitment, product development and marketing.

Daimler AG is joining investors such as Balderton Capital, Accel and Vitruvian Partners, all of which are re-investing in the tech firm.

Daimler AG's Axel Harries, vice president sales functions Mercedes-Benz Cars and product management Mercedes-Benz passenger cars, will also take a board seat on the Carwow board of directors.

The business offers dealers qualified enquiries from consumers that have researched their new or nearly new car through Carwow.

Carwow said over £5bn worth of vehicles have been sold through the website since it launched in 2013. It said currently one in every 20 new retail cars in the UK sold is now through Carwow, representing 5% of the market.

James Hind, founder of Carwow, said: “When Carwow was founded, there was a view from the industry that there might be some resistance for a model that levelled the playing field for consumers and dealers; having one of the world’s leading car manufacturers investing in the future growth and success of our business is a real proof point that this is a solution that works.

“This demonstrates that the industry perspective is shifting to what we anticipated when we launched, not only that the car purchasing journey was primed to move into the digital era, but that dealers and manufacturers can greatly reap the benefits of more informed and empowered customers.”