9:00 am, June 4, 2024
Swansway director Peter Smyth has given a scathing review of Cazoo and its founder Alex Chesterman as the failed used car dealer continues to search for a buyer.
The one-time online disruptor is currently sitting in administration after years of heavy spending and Smyth says the outcome should not come as a surprise.
Appearing on the latest episode of the Car Dealer Podcast, sponsored by JATO, he said the firm’s model was flawed from the get-go and accused its original plans of being ‘a work of complete fiction’.
Smyth, who was one of several interviewees in our special film on Cazoo back in 2022, also accused Chesterman of ‘getting everyone’s heckles up’ with derogatory comments about the motor trade.
He told podcast hosts Jon Reay and James Batchelor: ‘Nobody likes a smarty pants, do they? But from the word go, after reading the initial prospectus that he [Chesterman] put out, it was, to me, a work of complete fiction. JK Rowling would have been proud of it!
‘Within four years that man said that he was going to sell more cars than Arnold Clark – and by the way, he was going to employ people who had no knowledge of the industry.
‘If you look at Eddie [Hawthorne] and his team, between them they must have hundreds and hundreds of years of experience to sell 300,000 used cars and this guy brazenly comes along with no experience and says, “You’re all fools. The business is broken. You’re all sharp elbowed salesmen”.
He didn’t do himself any favours from the word go because he got everyone’s hackles up. He definitely got mine up.
‘Is he a shrewd businessman? Well I think he sold some of his shares and walked away with a pretty penny which I think makes him far wealthier than you and I. Was it morally right that he did that? I don’t know. It’s not for me to question but I thing never made a profit and blew its brains in.’
He added: ‘You could tell [where Cazoo was heading]. I know this business. I know what margins are in cars and you can’t start sponsoring Everton, Aston Villa, Valencia, there was a team in Italy, the snooker, the Derby, the tiddlywinks in Wilmslow.
‘You can’t just keep sponsoring all those events and think that you can build a brand overnight because our margins are very fine.
‘I’ll reiterate it again. I believe that if we can get 1% this year – 1% of our turnover – to hit the bottom line, we will have swum the channel this year because it’s a tough, tough year.’
‘You need the bricks and you need the clicks’
Despite being heavily critical of Cazoo, Smyth still believes there could have been a scenario in which the company survived.
He also credited Chesterman with helping dealers to ‘massively up their game’ when it came to digitalisation.
However, he insisted that a ‘bricks and clicks’ omnichannel approach will always be more effective than a purely online model.
He said: ‘I think they could have made it work, but he [Chesterman] massively underestimated the resolve of the people who currently work in the industry.
‘In fairness, was he a disrupter? Yes, he was a disrupter because one thing is for sure, he massively upped our game and the way we think about selling used cars now with regard to digitalisation.
‘We do not view our forecourt as our forecourt, we view our digital forecourt as our forecourt. So to us, it’s not a case of how quickly can we take a used car, buy it, prep it and put it outside on the pitch, it’s how quickly we can get a used car, prep it, and get it on Auto Trader or any of the other sites such as Motors or CarGurus or whatever.
‘They [Cazoo] have approached me [about using their online marketplace] and I’ve politely declined.
‘I did say to them, if you let me have it free for 12 months, I’ll consider it, but they turned around and said no, which is fine.’
He added: ‘Do I think they could have survived? I truly believe that a lot of used car buying is done digitally, but that final tip over the edge is when a customer actually comes to see the car. The day that they test drive the car is probably the day they’re going to drive it away.
‘One thing’s for sure, when they arrive and they’ve done all the homework and they’ve spoken by email or by phone to the sales person and they’ve got some idea of what they’ve got to pay, and we tell them, “Look, if you’re coming from a distance and you want to drive it away on the same day, these are the documents that you’ve got to bring”.
‘That has definitely changed, but I do think you need the bricks and you need the clicks.’
The Car Dealer Podcast, sponsored by JATO, sees an industry guest join our hosts to discuss the motor trade’s biggest headlines of every week.
Among the topics up for discussion in the latest episode were Auto Trader’s financial results, the updated Nissan Qashqai and Alfa Romeo’s famous number plates.
A full list of the stories discussed can be found here:
- Falling used electric car prices sees Hedin Mobility book hefty loss in Q1
- Auto Trader Group sees revenue soar 14% and pre-tax profit top £345m in 2023
- Bentley appoints Porsche vehicle development chief as new chairman and CEO
- Alfa Romeo to ditch famous off-set numberplates due to EU rule change
- Dacia to open new flagship dealership as brand prepares to put Spring EV on sale
- Nissan announces pricing for updated Qashqai as Sunderland plant ramps up EV production
You can listen to all episodes of the Car Dealer Podcast on Spotify, or wherever you get your podcasts.
