11:11 am, April 18, 2020
News that online car dealer Cazoo had resumed sales this week were met with a mix of anger and disbelief from the industry.
The start-up paused car sales at the start of the lockdown when it was concerned for staff and customer welfare. However, it claims it has now overcome those issues and has started to sell and deliver cars across the country again.
The move has been branded ‘irresponsible’ and ‘not in keeping with the spirit of the lockdown’ by dealers and industry experts in the Car Dealer Magazine Forum (the latest comments are on the end of that forum thread) and social media channels.
Whether you agree with the decision or not, it does open up questions that many dealers want answers to whether it is ok to sell cars during the lockdown and, most importantly, to deliver them?
While few would argue that selling cars – or taking orders – is perfectly acceptable during the lockdown, the big question lies around the delivery of those vehicles and whether they should wait.
The government’s advice is clear on staying home to save lives and protect the NHS – and there are strict rules around non-essential travel.
But at the same time the government is encouraging online businesses to continue to make sales and deliver them. Amazon in particular is trading as normal and delivering mostly non-essential items up and down the country every day.
So is it morally right to be delivering cars too?
Cazoo says half of its sales are to key workers and it is offering a £250 discount to NHS staff as part of the re-opening.
However, it’s been pointed out that means the other half of sales are non-essential and should not be delivered during the lockdown.
When questioned by Car Dealer Magazine, Cazoo told us that as an online business it had been actively encouraged to resume sales by the business secretary Alok Sharma, who wrote to retail businesses.
A spokesperson for Cazoo said:
‘The government is encouraging online businesses to continue as we are one of the only options available to those who need a car in these difficult times.
‘Cars are an important mode of transport for many, including health workers, some of whom are very reluctant to use public transportation at the moment.’
While the business secretary’s letter doesn’t specifically mention cars – highlighting instead electronics and technology – it does feel somewhat at odds with the government’s decision to shut car dealers. It would appear Cazoo may just have read into the letter what it wanted to hear.
Many have questioned how the online car dealer knows if the people it is selling to are key-workers – and that if the other 50 per cent are not key workers then should they be be delivering to them at all.
When Car Dealer Magazine shared the original story on social media channels and in our forum, the comments were a mix of shock and anger.
Gareth Kaye, a franchise director for van dealer Motus Commercials, called it ‘irresponsible’.
He said on LinkedIn: ‘Is it any wonder the motor trade has such a bad reputation? I take their claim around key workers in the extreme as I do all their claims and even if that were true, the other 50 per cent are non key workers.’
David Kendrick, partner at UHY Hacker Young, was particularly scathing of the move and also commented on our LinkedIn post.
He said: ‘Irresponsible if you ask me and perhaps more concerned about their hugely ageing inventory!
‘How can that ever be classed a critical journey during isolation, never mind protecting their employees and customers. Many businesses are keen to reopen as soon as possible but this really isn’t a good example.’
Meanwhile, Will Morgan, head of business at Bentley Newcastle said:
‘I know it’s frustrating for us all, but saving lives is the most important thing we can all do currently, and we do that by staying at home not delivering cars to customers all over the country.’
Those thoughts are echoed by Ford of Britain chairman and managing director Andy Barratt.
He is adamant that ‘lockdown means lockdown’, telling Car Dealer Live his dealers are banking orders and not delivering cars during the shutdown.
He said: ‘We have sold quite a few vehicles through the lockdown and we’ve had quite a few fleet enquiries. But lockdown is lockdown. If someone desperately wants a new car we will give them a courtesy car.
‘Reputations will be won and lost through the lockdown and consumers have incredibly long memories.
‘The population as a whole are so concerned with what’s going on that if we’re seen to be showing little regard for what is something in everyone’s interest, then shame on us.’
Privately, other manufacturers Car Dealer Magazine have spoken to are desperate to get sales going again in their dealerships, but they are all struggling to work out how they do it without causing a PR disaster.
So what’s the problem with delivering cars?
Well, just think of the number of people needed in the chain to facilitate that. The car needs to be moved, prepped by mechanics and valeters, and then driven to a customer’s home and handed over.
All of those steps potentially risk spreading coronavirus and many would argue needlessly puts people in danger of infection.
Cazoo would counter that by saying what they are doing is no different to that Amazon delivery driver dropping off parcels. Perhaps the real reason their reopening has caused such anger is that there isn’t currently a level playing field for other dealers.
There are many car dealers currently taking orders and selling cars online. Car Dealer Magazine has spoken to several and most are holding on to those cars until the lockdown lifts.
But, at odds to this, there is a real need for the industry to start up again.
The economy cannot cope with this hibernation state for much longer and there will come a time when a phased re-opening will have to allow dealers to go back to work.
But how would that work?
Well, in the US some states have told dealers they can only start selling cars again if they do it online and then deliver with a skeleton staff, all adhering to strict social distancing measures and donning the correct PPE.
That would be relatively easy to implement here – but it would need to be mandated by the government so every business knew where they stood.
90
percentage of American dealers predicted to have online sales function by end of 2020
In the US, Rhett Ricart, chairman of the National Auto Dealers Association, said that by the end of the year he believed 80-90 per cent of US new car dealers would have full online car sales functions in place. The UK is well behind that.
Even Auto Trader is advising dealers against delivering cars. In an online article is says:
‘The guidance on vehicle delivery for car sales remains unclear, so Auto Trader have decided not to launch our Home Delivery options at this time. We are closely monitoring government guidance, however, so that when lockdown measures are lifted, we do have solutions that are ready to go.
‘If the delivery of a car is not essential at this time, it should be delayed until after lockdown measures are eased.’
GForces has seen sales of its clever online e-commerce platforms rocket in March, and in April the firm says sales could be 400 per cent up – but there are still many dealers that have no online sales solutions in place.
There is likely to be a rush to introduce them soon as whatever the situation with regards to sales and deliveries looks like now, it is highly likely that they won’t be allowed to go back to selling in the ‘old’ way any time soon.
Neil McCue, operations director for Snows Motor Group and guest on Car Dealer Live on Monday, April 20, has pushed forward plans to introduce e-commerce to the group’s site as he thinks it will be the quickest way to get the group get back in business.
He added: ‘Despite this, we will only be following government guidelines and are not prepared to put our staff and customers at risk. Whilst we are desperate to generate income we have to be patient and do the right thing.’
When restrictions are eased, customers and staff are likely to still be concerned about contact – especially until a vaccine is found – and that is likely to lead buyers to demand contactless, online car sales so they can minimise travel and social contact.
Until the government makes an announcement on how and when restrictions may be eased, there will continue to be those dealers, like Cazoo, who believe they can and should be delivering cars – and far more who believe that’s bending the rules.
We asked the team at Lawgistics, the motor trade lawyers, what their thoughts on the legality – and morality – of delivering cars was.
Jason Williams, a former Trading Standards officer who now works for the firm has poured over the government’s regulations regarding movement during the lockdown.
He says that while it is perfectly legal to sell a car the decision to deliver it is up to the seller.
He said: ‘As for the delivery of a car to a paid consumer, attention is drawn to Regulation 6(2)(h) being “to fulfil a legal obligation”. We would argue that the delivering of a vehicle that has been paid for – if only in part – constitutes a contractual (and therefore legal) obligation that dealers can fulfil. Ensuring that social distancing parameters are respected of course.
‘As to whether that is moral is a matter of individual opinion – but it appears to be legal and the government does want, and is encouraging, deliveries to homes.
‘As to whether a car is an essential purchase is all dependent on the needs of the actual user. It could be to allow a key worker to get to work – whether it be to a school as a teacher, a nurse at a hospital, a shelf-packer at a supermarket, someone wishing to volunteer – or to allow shopping to be taken by a carer to a vulnerable person.
‘But I could go online now and order any number of wholly non-essential goods that all need to be picked up, packaged and delivered half-way around the UK to get to my home.
‘Ultimately, the decision to deliver a car or not is up to the seller but for the aforementioned reasons it might not be the heinous crime as some will have you believe.’
So, it seems, the decision to deliver is ultimately down to the individual.
But we’ll leave you with a comment from one dealer on our LinkedIn post: ‘No car sale is worth breaching the guidelines for – staying at home and protecting the NHS is far more important than profit right now.’
It’s a difficult conundrum and one that will take the industry a while to overcome.
More: NFDA says it thinks dealers CAN sell and deliver cars during lockdown
More: Should my business be opened or closed?
More: Cazoo restarts used car deliveries
More: Will online car sales allow dealerships to go back to work?
