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Former Imperial director reveals why used car dealer Cazoo bought supermarket group

  • Neil Smith spoke exclusively to Car Dealer about why Cazoo bought Imperial Car Supermarkets
  • Former director went on to work for Cazoo after the acquisition for more than a year
  • He spoke to Car Dealer as part of our documentary on Cazoo which you can watch above

Time 8:08 am, April 4, 2022

Former Imperial Car Supermarkets director Neil Smith has revealed why online used car disruptor Cazoo wanted to snap up the traditional dealership business.

In an exclusive interview, filmed as part of our special documentary on Cazoo which you can watch above, Smith explains the digital dealer wanted Imperial for four main reasons.

He also talks about what it was like when Cazoo took over Imperial in July 2020 and why the trade shouldn’t doubt them becoming a success.


Smith said he was ‘surprised’ at Cazoo’s interest when approaches were first made, but reveals he was in contact with the brand from the start of 2020 – just a few months after the pure online disruptor launched.

‘There were probably four main factors [why Cazoo wanted Imperial] – none of which the motor industry thought were the reasons,’ Smith revealed in the interview.

‘One was the distribution network we had across the UK at the time. They wanted to use our sites for internal distribution and then final mile delivery. 

‘There was the aftersales piece. We had built up an after sales network across the UK and that was of interest to them as they owned the customer journey up to the sales pieces but then lost control, so that was the second element.


‘The third element was to do with the ability to utilise our sites as very large billboards from an awareness piece and then beyond that it was about allowing them to offer a click and collect option to consumers who didn’t want to take delivery, but could go into the site and learn what the business is about.’

Smith said working for Cazoo was ‘intense, enjoyable and different’. He stayed with the firm for just over a year after the takeover, working as its retail operations director.

Inside a Cazoo dealership

He was in charge of turning the Imperial sites into Cazoo handover centres and when that work was finished, he agreed an exit and set up as a motor trade consultant.

He said: ‘Coming from a traditional used car retail background moving into what is ostensibly a fin-tech company that happens to sell vehicles, and trying to get to grips with that mindset was challenging, but they were great people.

‘It was interesting and fast moving and was certainly not a traditional retail model.’

In our documentary – which is also available as a Car Dealer Investigations Podcast – we ask experts their thoughts on Cazoo founder Alex Chesterman’s comments about car dealers.

In the past, he’s branded them as ‘flawed on every level’ and says the industry is ‘broken’ and needs ‘fixing’.

‘It’s the path a disruptor takes,’ said Smith in response to the comments.

‘The reason for coming and being a disruptor is because there are things wrong with that market, so calling that out probably didn’t go down well with traditional retailers.

‘I think what they did was certainly revolutionary.’

Smith said the Imperial team ‘played’ with online sales for four or five years and realised it wanted to improve its digital journey.

‘We never ever thought we’d get to the point, if I’m honest with you, that we deliver cars sight unseen,’ he added.

‘We never thought that would happen and I think no one in the trade did either.’

Doubters

Smith said that the motor trade shouldn’t doubt Cazoo and do so ‘at their peril’. 

He thinks the online car dealer is in a ‘relatively good position with their five year plan’ and that right now it isn’t about making a profit.

‘They have had challenges with the way cars are retailed and have challenges all the way through the process but most dealers have those as well,’ he said.

‘Cazoo know what they’re doing. They’ve got projections for 100,000 cars this year and they can sell vehicles. 


‘The model is based on five years in terms of projections and in five years they’ll be turning a profit.

Cazoo Southampton

Neil Smith turned former Imperial site in Southampton into a Cazoo centre

‘You’ve got to give Cazoo another two to three years to make good on their projections and the model. This is a brand building exercise at present, they are continuing to build volume.

‘The trade can continue to knock the fact they’re not a profitable business at the moment but none of these disruptors in the early days are. 

‘It’s about building a business.’

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Cazoo will release its 2021 results on Friday this week, something the motor trade will be watching very carefully. 

Since it listed on the New York Stock Exchange via an SPAC, shares have tumbled – at one point they were down 70 per cent.

‘Yes, dropping from a $7bn valuation to a $2bn valuation doesn’t look great, it doesn’t look good at all, but it’s still a $2bn valuation and at a point it will bounce back,’ said Smith.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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