Online used car retailer Cazoo snaps up car subscription service Drover

8:24 am, December 17, 2020

Cazoo has purchased car subscription service Drover for an undisclosed sum.

The deal allows Cazoo to enter the rapidly growing world of new car subscriptions alongside its online used car operation.

A statement issued by Cazoo this morning said: ‘The deal will combine Cazoo’s brand, platform and significant funding with Drover’s expertise and relationships in car subscription and, once integrated, will enable Cazoo to give its customers the option of purchasing, financing or subscribing to the thousands of cars on its platform. ‘

The statement added: ‘Cazoo has been rapidly rolling out its customer centres across the UK, opening 14 new sites in the past 14 weeks and once this acquisition is integrated its subscription customers will be able to choose between having their car delivered to their door or collecting it within as little as 72 hours.’

Ad-free Car Dealer website, £5 per month

The acquisition brings forward Cazoo’s place in the subscription market as it had planned to launch its own service in late 2021 to become the ‘Netflix of cars’, the statement said.

Drover offers customers the opportunity to ‘subscribe’ to their new car as opposed to leasing, financing or buying out right.

It trades offering a simpler service attuned to modern consumer habits for using subscription services.

Launched in 2016 by Felix Leuschner and Matthew Varughese, Drover has described itself as a ‘Netflix for cars’ in the past.

What is Drover and how does it differ?

Commenting on the deal, Cazoo boss Alex Chesterman said: ‘The acquisition of Drover will enable Cazoo to rapidly expand into car subscriptions and give our customers the option of purchasing their next car outright, financing it over a multi-year period or subscribing for a shorter, more flexible period.

‘I am looking forward to welcoming Felix and his team to Cazoo and continuing to deliver the most innovative and best options for consumers across the UK looking for their next car.’

It’s Cazoo’s second big acquisition in six months after buying Imperial Cars in July.

Last month, in an interview with the Times, Chesterman took a swipe at the traditional role of car dealers and retailing in the UK, calling the model ‘flawed at every level’ and revealed plans to launch a ‘Netflix for cars’.

The paper reported: ‘Like every other founder of a digital company, he [Chesterman] wants to build a subscription business.

‘Next year, Cazoo will launch a “Netflix for cars” package. For a monthly fee, it will provide a car and will take care of tax, MOT, maintenance, breakdown and insurance, all intended to “appeal people who want more flexibility and less commitment.’

In July, Cazoo snapped up the car supermarket group Imperial Cars and its 18 sites for an undisclosed sum.

In September, it made hundreds of staff redundant and in a move that surprised industry insiders, the online used car retailer turned former Imperial Cars showrooms into a number of ‘customer handover sites’.

It’s unclear whether Cazoo will keep the Drover name or rebrand it.

In a Car Dealer Live filmed last month (which you can watch at the top of this story), Drover bosses explained the consumer trend towards car subscription models, saying customers liked how Drover ‘does all the hard work’ for the customer, while the user just pays ‘one predictable fee’.

At the time, Drover COO Chris Moysen said: ‘They’re [consumers] used to subscriptions on things like their phones, Netflix, and the car is for many people still a tool.

‘We’re seeing a shift away from company cars, even before Covid, and people want a nice car but they’re not experts in buying or leasing.

‘We try and give people a good choice of cars – not an unlimited choice – but they pick that car on our website and it’s delivered to their door.’

David Kendrick, partner at accountancy UHY Hacker Young said: ‘It’s quite fascinating. It’s yet another company that I believe hasn’t made any money yet – surely they need to buy something that generates profit – although that’s not how these tech investors seem to see it and perhaps a floatation won’t either.’

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