7:27 am, January 11, 2024
Online used car dealer Cinch – which aims to make selling vehicles ‘faff free’ – lost £181.2m last year.
In accounts just filed for Cinch Cars Limited with Companies House, the firm revealed its losses had risen 42% for the year ending April 2023, up from £126.8m the year before.
Cinch said the losses were made as it ‘continued to invest in marketing, innovation, systems and personnel’ and that it was aiming for ‘long term growth’.
Revenue at the business grew 24% topping £1bn, up from £815.7m the year before.
Cinch sells its own used cars – as well as a small number of other dealers’ inventory – purely online.
At the time of writing, the firm had more than 7,500 used cars for sale on its website. That number has dropped from 10,263 at the end of April 2022.
The firm offers a ‘14-day money back guarantee’ and a 90-day warranty, delivering cars purchased on its website to customers’ homes.
Cinch is part of the sprawling Constellation Automotive Group which owns auction house BCA, car buying service We Buy Any Car and franchised dealer Marshalls.
Earlier this week, Car Dealer reported the parent group saw losses deepen from £800k in 2022 to £103.9m in 2023.
Cinch said: ‘During the year the company continued development of the Cinch online platform and supporting technology, designed to allow consumers to find, buy and sell a car based on their lifestyle requirements as well as based on technical specification or brand perceptions.
‘During the year, market and macro-economic conditions in the UK remained uncertain.
‘The ongoing war in Ukraine, increased energy and fuel prices, high inflation and rising interest rates have adversely impacted consumer confidence particularly for premium cars.’
What is not shown in the accounts is the impact of the huge drops in used car prices that car dealers’ suffered at the end of 2023.
Trade prices fell more than 10% in the final quarter of the year and the shift will have been punishing to groups carrying large inventories of used car stock. Cinch’s accounts do not cover that period.
However, some of the benefits of parent group Constellation Automotive Group buying franchised dealer Marshall were revealed in the accounts with it showing £113m of related party transactions – presumably Cinch buying used cars from its sister firm.
Cinch also spent £3m with BCA during the financial year and paid out £22m to the car transportation arm BCA Logistics.
The highest paid director for Cinch Cars Limited received £209,000 during the year while in total the dealer had 471 staff.
In 2023, the firm also said it paid £50,000 for the dormant company, Cinch Limited, and the costs involved in the purchase were written off during the year.
Cinch now also owns 48% of the company behind the British Motor Show, Automation Events Limited.
As at the end of April 2023 it had net assets of £120.6m, compared to net liabilities of £158.9m at the same point the year before.
Recently, online used car rival Cazoo – which has a near identical business model to Cinch – warned it faced going under as it urgently needs to raise cash.
The used car dealer, which is listed on the New York Stock Exchange, said just before Christmas that its liquidity – the ability to turn assets into cash – was limited and it must ‘substantially alter, or possibly even discontinue, operations’ if it didn’t get enough money, according to a Reuters report.
