Cazoo’s troubles stem from online-only used car sales when hybrid models are better – expert

  • Automotive lawyer Iain Larkins discusses future of online car sales
  • Expert says a fully online buying process is ‘perhaps not realistic’
  • Lawyer tells Car Dealer he expects number of physical sales sites to drop in coming years
  • Former Mercedes man also expresses disbelief at Cazoo’s struggles

Time 8:25 am, March 1, 2023

As troubled used car dealer Cazoo continues to struggle, one expert says that it is ‘not realistic’ to expect buyers to buy a car fully online.

Automotive legal expert Iain Larkins says that he expects the number of physical sales sites to fall in the coming years, but he does not see drivers turning to online-only services.

The lawyer, who spent 15 years in the legal department at Mercedes, believes most motorists still want a physical aspect to the car buying process.

Despite that, he told Car Dealer that he ‘struggles to see how Cazoo has gone so badly wrong’ in such a short space of time.

Earlier this week, we reported that the Cazoo sites in Northampton and Chertsey had been sold to Arnold Clark, in a deal worth £10.5m.

It comes amidst a huge cost-cutting exercise aimed at recouping some of the eye-watering losses incurred by the firm in recent years.

Cazoo has sold its operations in GermanyItaly and Spain, shut down its car subscription business and is in the process of selling off a large proportion of its prep centres. Last week it sold its data business Cazana.

Larkins said: ‘It has surprised me for many years that we have so many physical showrooms for cars.

‘We are all very happy to travel 60 miles to Ikea, for example, but most car dealers have got a sales location in every town.

‘I think a reduction in physical sites for sales is a change that has been inevitable for some time really.

‘When it comes to Cazoo specifically, I am struggling to understand how it has gone so badly wrong.

‘It seems to me that they’ve just spent too much money – particularly when it comes to marketing – and now it’s left their costs so out of kilter.

‘I think the big thing is that market research appears to show that people do still like some physical part of that online sales journey and I guess most people would see it as a very expensive purchase.

‘To be fully online is something that is perhaps not realistic.’

Speaking exclusively to Car Dealer, Larkins said that, despite reservations, the online sales model can work – if it successfully integrates physical aspects.

Since the pandemic, several dealer groups have ramped up their omnichannel approaches and Larkins believes a hybrid model could prove successful.

‘To give a slightly off topic example, I’ve recently been buying a new set of garden furniture,’ he said. ‘In the grand scheme of things it is relatively inexpensive but one of the sets we were interested in wasn’t available to see anywhere.

‘I wasn’t willing to spend that much money without actually touching and seeing it for myself.

‘It doesn’t matter that they say you can send it back and it’s only £100, I’d rather just go and see it even if it means traveling. I think it’s the same with the car buying process.

‘People are quite happy to buy online but they do still want to go and touch and see and test drive so they have that physical part of the journey.’ 

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Jack Williams's avatar

Jack joined the Car Dealer team in 2021 as a staff writer. He previously worked as a national newspaper journalist for BNPS Press Agency. He has provided news and motoring stories for a number of national publications including The Sun, The Times and The Daily Mirror.

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