9:18 am, September 9, 2024
Wheeler Dealers host Mike Brewer and our Car Dealer Podcast Live guests gave their opinions on why online-only second hand car seller Cazoo failed at last week’s event.
At the Podcast Live recording, sponsored by Motorway, Brewer, as well as EV Experts co founder Estelle Miller and Vines BMW boss Sean Kelly, waded in on the hot topic.
Cazoo’s collapse was picked as the story of the year by James Baggott and he explained at length why he thought the headline was so important to the industry.
Clips of the conversation can be seen above in the video or you can listen to the episode in full now on Spotify or Apple Podcasts.
Brewer said the whole Cazoo saga made him ‘mighty angry’ especially after Cazoo founder Alex Chesterman said the motor industry was beset with ‘sharp elbowed salesmen’ in interviews prior to launch.
Brewer said: ‘I’m very passionate about our brethren and industry and what we do.
‘It really does irk me when people like that want to put down the motor trade and think they’ve got this grand plan for how it should run.’
Cazoo collapsed into administration earlier this year after racking up losses in the hundreds of millions in previous years.
The used car dealer attempted to sell cars online and deliver them to people’s homes and refused to set up retail sites, despite purchasing Imperial Car Supermarkets in 2020.
The firm also spent tens of millions sponsoring Premiership football teams Everton and Aston Villa, as well as putting its name to horse racing, darts, golf and snooker tournaments.
Baggott said: ‘When they launched, the motor trade was just flabbergasted by quite how much money this company threw around.
‘They didn’t just sponsor one football team, did they? They sponsored two Premier League football teams, they sponsored the snooker, they sponsored the golf, basically anything that they could sponsor they spent money on, which meant blowing millions of pounds.
‘And that wasn’t their money, was it? It was investors money that they splashed out.
‘This was obviously all led by the founder, Alex Chesterman. And I think one of the other reasons this really kind of gets up the nose of the motor trade is because he just slagged us all off.
‘He labelled the motor trade as sharp elbowed salesmen and kind of puffed out his chest in interviews, saying we weren’t doing the job properly; that the motor trade was doing it incorrectly.
‘He thought there was a better way and really, the fact of the matter was, there wasn’t a better way of doing things.’
Vines boss Kelly likened Cazoo’s growth to the ‘Dotcom bubble’. Cazoo listed on the New York Stock Exchange at an initial valuation of $8bn, but that value rapidly eroded away.
However, Cazoo’s biggest mistake, believes Kelly, was the fact it invested in its own used car stock.
‘I think that was the fundamental issue with Cazoo,’ he explained during the podcast.
‘If you look at another behemoth, internet car sales giant, Auto Trader, they make a ton of money and all they’re doing is facilitating people selling cars and people wanting to buy them.
‘You’d think [Chesterman] would have learnt his lesson because he did that kind of Love Film bit and so on, and he had all these DVDs, but they don’t depreciate too much in value compared to a used car.
‘So for me, the industry was ripe for a bit of change, because I’ll be honest and certainly in our business, we weren’t as online savvy as we should have been. Loads of other businesses in the six months from lockdown reopening, got dead good at that, didn’t we?
‘Cazoo’s USP disappeared in about six months.’
Kelly said the ‘power of the crowds’ likely swept investors along and he believed they got ‘carried away by the narrative’ of Cazoo.
Miller, who runs the two-site electric used car dealership EV Experts, said she thought Cazoo’s biggest mistake was remembering people like to buy from people.
She said: ‘A second hand car is going to have been driven a lot on the motorway, it’s going to have a lot of stone chips – they’re all so different. Ultimately you need to see the metal, touch the metal and be happy with it.
‘I think people buy cars from people. So just taking that completely out of the transaction is not going to help.’
Jamie Caple, who runs used car dealer Car Quay, was in the Podcast Live audience and said Cazoo had made all car dealers’ jobs harder.
He said: ‘Mr Chesterman must be loving it, because he’s created this business that was never going to work, raised loads of money, took a massive chunk, bailed and we’re left with the legacy of it.
‘That means we have customers who expect cars to be delivered across the country, and if they ain’t happy, they can send it back. It’s like now we’re in a situation where customers, they have a scratch, they have a stone chip, they just want to send it back.
‘Or they can just wake up after a bad night’s sleep, and say we’re just going to send the car back.
‘I kind of thought it was good in the pandemic, but now the legacy of it is – well it’s hard work. It’s made our jobs tougher.’
You can listen to the full discussion about Cazoo and the other topics in the Car Dealer Podcast Live, sponsored by Motorway, special episode which is out now.
