Comment: Why Cazoo founder was naive to label this used car sales business as ‘flawed at every level’

I won’t lie. There have been times during my decade-long stint of writing content for Car Dealer in which I have struggled for inspiration.

It’s not a reflection of the strict editorial guidelines that the editor and team give me. It’s also not a lack of opinions, to which many former and current colleagues would attest. It is simply that our industry is hardly blockbuster box-office stuff.

However, 2020 is a bit different.

As I recently wrote, commenting on Covid-related market conditions and speculation is fuel enough, but the disruptor Cazoo has also given me plenty to think about.

Therefore, having read the recent Car Dealer headline – Cazoo founder takes swipe at car dealers – which reported on an interview with Alex Chesterman by The Times, my immediate reaction was ‘seconds out, round one’…

Before I go on, it’s important to note that I’ve written on many occasions that our industry isn’t progressive and creative enough.

There are too many powerful executives who aren’t prepared to drive significant change for fear of hitting what limited profitability this business provides (especially at dealer level).

But to say the business model is ‘flawed at every level’ is naïve.

According to Mr Chesterman, the used car market has a ‘complete lack of online penetration’.

It is fair to say that prior to Cazoo, no company – disruptor or established retailer – had made a decent fist of organising their infrastructure, website and trading processes into one coherent strategy.

However, the idea that traditional dealers had no idea how to sell cars online is rubbish.

Refund policy

As Cazoo is no doubt finding out, we don’t actually know how many of its 10,000 cars have come back as a result of its seven-day return policy. (I’d like to point out that given how the contract is formed, the customer actually has at least 14 days to return the car, but that isn’t the point.)

I am sure it is very few, but I know from having looked after prestige used car departments for more than a decade, you don’t need many to knock a hole in your profit forecast.

As more and more people are aware of Cazoo and that being a consumer offer, more and more people will use it.

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Mr Chesterman says that a ‘seven-minute test drive’ for ‘the second-largest purchase you are likely to make’ means ‘the experience is really not a great one’.

Well, that might be true in Mr Chesterman’s childhood home of St John’s Wood, but London is one market.

Many dealers are happy to let customers have a sensible test drive in all but the most exotic or classic of cars, so that is simply not accurate. But with the owner of the Daily Mail owning 20 per cent of the company, why let facts get in the way of a good headline?

The article highlights that according to Cazoo, ‘you have to haggle to get the best deal’.

Hands up who has tried to tell a customer in the last few years that the advertised used car price is the best price, but is met with a torrent of abuse that it is all nonsense? I know I have.

The other experiential aspect that is referred to is the lack of transparency around the condition of the car.

In fairness to Cazoo, their website is very slick. The ‘imperfections’ area, as they call it, is a great idea, but anyone who has ever bought a car from BCA or Manheim on a condition report will tell you it isn’t possible to spot everything.

One industry criticism that I think is legitimate is that of the treatment of female customers.

This attitude – like in life generally, perhaps – is changing, albeit at a glacial pace.

There are more women in sales roles than there were when I joined the industry and review sites should keep dealers honest, but it is still not enough.

I get it – all PR is good PR.

The more Cazoo’s PR machine takes a swipe at the industry, the more website hits and, inevitably, more business they will do.

However, I can’t help thinking that Mr Chesterman took aim at the wrong target.

I wrote years ago that Auto Trader was there to be taken down, and if you think about Mr Chesterman’s previous successes – LoveFilm and Zoopla – there was no hardware involved.

Mr Chesterman will well and truly be enshrined in the hall of fame if he can significantly disrupt a market in which Tesco failed, Richard Branson failed, the South Korean manufacturer Daewoo failed and many smaller players in between.

Read James Litton’s latest column for Car Dealer here – you’ll find it on page 21

More Cazoo stories can be found here

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