Peter Simpson provides us with an insight into the automotive sales trading world – and beyond.
Cinchloss?
►Are we seeing the start of a return to dealer-based car selling, and a switch away from online-only sales? Last month we repor ted how many dealers trading from premises had bumper years in 2021. By contrast, the two bestknown online -only groups both made thumping losses, and in one case have announced a dramatic cutback.
For star ters, online car retailer Cinch – in case you’re confused that ’s the one owned by Constellation Group alongside Webuyanycar, BCA and Marshall Group, and the one with the advertisements fronted by Rylan Clark-Neal – have just posted a pre -tax loss before tax of £149million, or £126.7million after tax, for the year ending April 2022. This is compared to the previous year ’s loss of £22million.
Unsurprisingly, Cinch are putting a brave face on this per formance – the official statement claims that the losses were “consistent with the stage of development of the business and ongoing investments in the Cinch online platform, marketing and operating scale.” They added, optimistically, that “the company will explore opportunities for growth through new marketplaces and strategic investments and acquisitions.”
Cinch’s problems however fade into almost-insignificance compared to rival Cazoo’s, whose recent woes seem to have escalated further. Cazoo was founded in 2019 by Alex Chesterman who had previously launched Zoopla and Lovefilm, and Chesterman made no secret of his intention to change completely the retail used-car market.
However, despite – or possibly because of – rapid expansion in the UK and into mainland Europe, Cazoo has yet to post a profit! In 2021, losses of £180milion were posted on revenue of £668million. Then, in just the first half of 2022, losses of £243million were repor ted.
Then, in January 2023, Chesterman stood down as CEO, and staff were informed that major contractions in the business were needed, including closure of 15 out of 22 car handover centres, along with one of Cazoo’s two call centres and several car preparation centres. This is ongoing at the time of writing.
Along with wholesale reduction in European operations, it ’s hoped that these changes will make Cazoo into a viable and profitable business, albeit one selling less cars.
However, the recent per formance of both Cazoo and Cinch compared to the record-break ing profits generated by Arnold Clark, Sytner, Pendragon and so on must surely call into question how ready the Great British Car-Buying public is to embrace distance/unseen car buying.
ULEZ expansion
