9:05 am, November 16, 2021
Traditional dealers are facing a ‘big change’ if they are to compete with online retailers such as Cinch and Cazoo.
That is the opinion of Auto Trader boss Nathan Coe who says the new wave of retailers are ‘breaking down geographic boundaries’.
The CEO says that dealers who are not able to adapt face being left behind by a rapidly changing industry.
He believes it is now crucial for all dealers to make it easy for customers to go through as much of the sales process online as possible.
Coe said: ‘These operators, whether it’s the specific ones, or as a general group, are not going away and the experience that they’re offering to consumers is good.
‘It’s good and they’re good at the basics of digital retailing and retailing, as well.
‘Retailers, I do think, will find these (online) retailers breaking down the geographic boundaries that have historically defined automotive retailing and you will find these players selling in your backyard or right next to your forecourt.
‘That means you all of a sudden do need to provide an experience where people can do more of the process online – otherwise they’ll just go somewhere else where they can – and we obviously as Auto Trader are trying to help that be a reality – but all of a sudden you’re competing with an experience that’s going to feel very customer centric.’
Cazoo’s latest accounts showed that the firm saw its total loss deepen massively to £102.7m up to the end of 2020.
Since the end of the reporting period, it has bought subscription services Drover in the UK for £58.8m and Cluno in Germany for £60.4m.
It has also brought the refurbishment of vehicles in-house by acquiring Smart Fleet Solutions for £23.1m plus £15.9m of its freehold property, as well as SMH Fleet Solutions – which also carries out vehicle movements – for some £70m, and bought Cazana for £25m.
In addition, it floated on the New York Stock Exchange following a business combination with special purpose acquisition company Ajax I – the new holding company is based in the Cayman Islands.
Cazoo has also agreed to buy Vans365 for £6.5m, subject to FCA approval.
Despite the huge expenditure and eye-watering losses, Coe believes that Cazoo – and others like it – are here to stay.
While not referencing any specific company, he praised the new online retailers for their customer service.
‘They sort out issues quickly, they’ve got promises around the condition of the car and the availability of the car, it just does change the playing field quite dramatically,’ Coe added.
‘I think that that snowball has now started actually and I think if you think our business, we are in partnership with retailers, we’re going to provide a lot of the ability, both the brand and the technology for them to be able to do it.
‘They need to have the desire to change and I think we want them to be successful but we at the same time do see there is going to be some risk to our average customer that has a forecourt with maybe 35 to 40 cars on it.
‘That’s a big change for them to come to terms with even though we’re here to make it easy, it’s still something that we’ve got to watch to make sure that the industry stays as big and as varied and diverse as it is today in the future.’
You can watch the full interview with Nathan Coe at the top of this story
