The founder of Freeserve Ajaz Ahmed and Swansway Garages director Peter Smyth have gone head to head in a debate about the future of used car sales.
The special Car Dealer Live video sees the two discuss Ahmed’s exclusive blog where he said he believes online disruptors including Cazoo, Cinch and Carzam are ‘set to steal car dealers’ business’.
Ahmed wrote that car dealers need to stop using ‘stupid arguments’ not to change and should embrace a new way of selling cars.
And he warned that these digital disruptors could kill off traditional car dealers, just like Amazon did with the High Street.
Ahmed founded the UK’s first billion pound internet company Freeserve, which was sold three years after launch for £1.65bn. He now specialises in digital disruption across many different industries.
Defending the motor trade in the debate is Peter Smyth, director of Swansway Garages, a successful family franchised car dealer group based in the North West which represents brands including Audi, Jaguar Land Rover and Volkswagen.
The debate can be watched in full on video at the top of this post or listen to it as part of our special new series of Car Dealer Investigations Podcasts.
You can find the series on your favourite podcast platform, including Spotfiy and Apple Podcasts, by searching ‘Car Dealer Investigations’.
During the debate, Ahmed says car dealers need to stop focussing on the drop in share price Cazoo has suffered since listing and instead focus on how to improve.
Cazoo shares are down 70 per cent since they listed.
Ahmed said: ‘Car dealers need to stop looking at the share price and focus on what they need to do to change.
‘I have heard these arguments many, many times so focus on the things that you need to do to change and just copy other people.
‘If you like the way they [online disruptors] take photographs, copy it.
‘If you like the way they arrange information, copy it. Obviously don’t make it look exactly like theirs but learn from them and take advantage of the assets they’ve got.’
Wither on the vine
Smyth is not convinced Cazoo will ultimately succeed and instead highlights Cinch as the online disruptor to watch.
He said: ‘If you take Cinch, Cazoo and Carzam I think that by far and away the ones that the motor trade fear most are Cinch and the reason being is they have got good supply of used cars through BCA, because obviously it’s Constellation; WeBuyAnyCar.com which acquired 600,000 cars last year and obviously now Avril Palmer-Baunack is is going to take well to Marshall Motor Holdings into private ownership.
‘That is a real, real threat to us.
‘Also, and she’s an extremely clever woman, she’s bought a 20 per cent share in Lookers, which basically renders that business unsellable to the likes of Cazoo.
‘Cazoo on the other hand, I think will wither on the vine.
‘You’ve only got to look at its share price this morning at $2.93 which means that the business that was once valued at £7bn is now valued at £1.7bn.
‘I think that the investors are realising that actually Cazoo is not an internet-based business as they have had to buy more traditional places.’
During the debate, Ahmed takes aim at car dealer names and says he believes they don’t resonate with customers.
He said: ‘When I look at car dealers a lot of them sound like law firms, they’ve never changed the brands that they’ve got.
‘The experience of walking into a car dealership is the same as it was 20, 30, 40 years ago.
‘Then we look at the websites and they’re very poor, they use platforms that are very old, not fit for purpose, and when you compare them with the new players, they’re just not as good as they should be.
‘I don’t think that the established players, the ones that have been there for many, many years, are doing anything to actually fight back.’
During the debate, the pair also discuss what the biggest advantages are for traditional car dealerships, whether the industry has been given a wake up call by the likes of Cazoo and whether they think customers actually do want to buy used cars online.
Ahmed said: ‘One of the things that they [traditional dealers] can do that people like Cinch can’t do is take advantage of the forecourts, but the forecourts that they’ve got, haven’t changed.
‘They need to make the experience a better experience. They need to have points of sale.’
Smyth points out that he is firm believer that car dealerships will last – but that numbers will fall.
He added: ‘I think that the car dealership will last but there will be less of them and I think that that will probably be an effect made by the OEM, rather than the disruptors.
‘I think there will be less of them but it’s been proven that while people do like to do their research online, they also feel comforted by the fact that they do have some redress by being able to go back to a dealership if anything goes wrong.
‘I think that is where we as a physical dealer can still forge that good relationship with the customer.’
You can watch the debate in full in our Car Dealer Live video below or search for the special Podcast under ‘Car Dealer Investigations’.
Who do you agree with? Let us know by emailing your comments to the Car Dealer editorial team.