9:08 am, July 25, 2024
Last week’s announcement that Cinch is opening its first physical showrooms was seen by many as an admission that the purely digital model has failed.
The firm is opening stores in Northampton, Birmingham, Bristol and Manchester as it looks to adopt a more mainstream ‘omnichannel’ approach to used car sales.
It follows the dramatic collapse of Cazoo earlier this year, with recent documents showing that the one-time online disruptor went into administration with unsecured debts of £260m.
So are online-only car sales dead? To find out, we chatted to some industry experts to get their take on what the future holds for the model.
In response to our question, Cox Automotive said that online-only is not dead and continues to have a place in the motor trade.
However, the firm says the approach only caters to a ‘tiny proportion of the market’ and advised dealers to adopt a blended approach going forward.
Philip Nothard, insight Director at Cox Automotive, said: ‘Cazoo came in quick, they came in heavy and they came in with a concept that, on the face of it, worked in many ways.
‘However, many established retailers could already offer what they’d built, and others with the desire to were able to catch up quickly.
‘Their enormous marketing investment ironically benefitted the whole sector, as it firmly put the concept of buying used cars online into the public’s consciousness.
‘Yet, the number of used cars selling organically online – that is, without any engagement with a human – is a tiny proportion of the market, and all the evidence points to the fact that used car buyers like to do their research online but still like to touch and feel their chosen vehicle before committing.
‘Pure online is not dead, and it has a place. Indeed, I think it will grow over time, especially as a new generation of car-buying consumers emerges and EVs become a mainstream choice in the used market.
‘Still, physical retail will be part of our landscape long into the future, it just needs to be connected to the online buyer journey. Omnichannel might sound like a tech evangelist’s buzzword, but it’s exactly what today’s car buyers expect from dealers.’
The so-called ‘bricks and clicks’ approach was also championed by Swansway director Peter Smyth.
On the question of whether the purely digital market was dead, he told Car Dealer ‘never say never’ but added he did not think the model was sustainable in the long-term.
He said: ‘Do I think online only is dead? I would say never, say never, because I don’t think you ever can, but with used cars, there’s a couple of things.
‘Every, every used car is unique in its own way and people want to come and try and test it before they they actually commit to purchasing it.
‘I know that they [Cinch and Cazoo] did a 14-day money back guarantee but in a market where cars depreciate at roughly 3% per month, that isn’t a viable proposition, really.
‘Never say never but I think it proves that there is, both short term and long term, a need for a bricks and clicks way of selling.
‘On Cinch, I think it’s fair to say they’ve recognised there is a need to do something that is not just online only, which I suppose answers that first question because if online-only was the only way, then why would Cinch go and take on some leases that Cazoo had?
‘My thoughts on Cinch are that it will probably die a slow death over a quite a long period of time.’
‘Selling unseen wasn’t something new to dealers’
Other dealers have questioned whether the online disruptors truly offered something different from what traditional retailers have been providing for years.
It is an opinion that Umesh Samani, chairman and founder of the IMDA, feels strongly about.
‘I remember when Cazoo started and I was asked about how I felt this would affect my business,’ he told Car Dealer.
‘Various journalists from the Times and Telegraph were telling me that independent dealers would be dead, and the new way was the Cazoo way of online sales.
‘I explained to them that online wasn’t the future and I’m on record as saying most customers still want the touch, feel and smell experience. I thought the split would be around 70/30 – 30% being happy to buy unseen.
‘I said selling unseen wasn’t something new to dealers, I have a testimonial from October 2010 from a customer who bought unseen, many dealers having been selling cars unseen for years, what Cazoo and Cinch did was normalise buying unseen with their marketing, which we must all thank them for!
‘I believe both Cazoo and Cinch could have made better success but they needed to up the game, do proper in depth videos of their cars and better quality images so the buyers have more confidence.
‘We all know the part-exchange of sellers cars aren’t always accurate and it’s all too easy to give a valuation based on reg number and mileage. Not having experienced staff to deal with the valuations can quickly cost a fortune.
‘Customers’ expectations also appear to me higher than I’ve noticed over the years. Too many customers are led by price markers on Auto Trader and don’t always look at what they are buying or getting for the money, just simply looking at price and not always comparing quality, number of owners, service history , dealer reputation.’
Throughout our conversations with industry insiders, one thing that came up time and time again was the importance of the relationship between dealers and their customers.
Robin Luscombe, boss of dealer group Luscombe Motors, said that selling purely online does not allow customers to ‘build trust’.
He told Car Dealer: ‘I think online car buying research is booming, but online transacting is a different story!
‘Buyers want to talk to knowledgeable people, ask detailed questions, build trust, have a personal relationship with the seller and sales execs to gain confidence, and in many but not all cases touch and feel the car.
‘The personal relationship either face-to-face, on the phone or via email directly with a knowledgeable person is vital.’
