7:19 am, June 6, 2022
Carzam founder Peter Waddell has blamed the failure of the online used car business on rivals Cazoo.
In an interview with The Times, Carzam founder Waddell repeated claims made to Car Dealer that the firm’s collapse was down to online rivals.
‘If Chesterman had done his job and kept going and the shares had rebounded, we might have had the chance to get some money,’ Waddell told the paper.
Cazoo’s share price has plummeted 86 per cent since it listed on the NYSE.
Cazoo founder Alex Chesterman blames his firm’s share price drop on ‘irrational’ investor fear, despite recently admitting that the online dealer ‘may never achieve profitability’.
In his interview with The Times, Waddell added: ‘We couldn’t get any funding because share prices in Cazoo and Carvana went down 85 per cent.
‘Business is all about taking a chance. We tried. It didn’t work.
‘We didn’t get the funding. We walked away. I am focusing on my business, which is Big Motoring World.
‘Big makes a lot of money and what will we do? We’ll write it back off tax, won’t we?’
Waddell also told the paper that Carzam ‘was very honest in what it told everyone. We funded it ourself, everyone got paid and we closed it under voluntary receivership to close it properly’.
Car Dealer reported on Friday that the business had been placed in voluntary receivership.
A message on the used car disruptor’s website notified customers and suppliers this was the case.
Adam Stephens and Greg Palfrey of Smith & Williamson have been appointed joint administrators.
Warning signs
The alarm bells began to sound at Carzam earlier this year after a series of high profile departures.
Chairman and former Paddy Power boss Andy McCue left after just three months and was soon followed by CEO Kirk O’Callaghan.
Waddell resigned as a director in April to concentrate on growing Big Motoring World.
Waddell has regularly attacked his rivals Cazoo on social media, often goading Chesterman on LinkedIn with comments about his business’ performance.
Carzam was launched as a rival by Waddell and entrepreneur John Bailey in 2020 with an initial £50m investment from the pair.
They received £112m six months ago from an American hedge fund to use as a stocking loan to buy vehicles, but Waddell told The Times the firm needed between £20-£30m to grow.
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He said investors were put off when they saw the share prices in Cazoo and Carvana drop and posed the question why Carzam should choose to continue to pay a stocking loan when they ‘can’t get any more funding to grow’.
Waddell’s business partner Bailey has not commented about the collapse of Carzam. He has been contacted.
On Friday, Waddell told Car Dealer: ‘As you know I went out of Carzam to build Big with Freshstream.
‘We put (Carzam) into voluntary receivership. I was only an investor in the end.
‘We only got a little bit of investment. After Cazoo’s share price fell, (and with rivals) losing massive amounts of money we couldn’t get investment, is the truth.’
Carzam launched late in 2020 with a promise to ‘accelerate motor trade change’.
Used car buyers could select cars on the website and have them delivered to their homes.
UHY Hacker Young partner David Kendrick said: ‘This was the one, I felt, had a chance of succeeding as it was run by “car” people who knew the industry.
‘Clearly this is a big concern for the others like Cazoo, showing perhaps a single channel model simply doesn’t work.’
Ajaz Ahmed, founder of Freeserve, who has written for Car Dealer on the subject of online disruptors, said he felt the reason Carzam went out of business was ‘simple’.
‘They went out of business because they didn’t know what they were doing,’ he said.
‘The business model is not dead as long as you know what you are doing.’
Ahmed and Swansway Garages director Peter Smyth went head to head in a special Car Dealer Live debate about the future of used car sales in March.
The video, which you can watch below, sees the two discuss Ahmed’s exclusive blog where he said he believes online disruptors including Cazoo, Cinch and Carzam are ‘set to steal car dealers’ business’.
