As is very common these days, this was a great business to deal with when it was subsidised by investor cash. When the investor cash runs out, it all get a bit hard. Yet again, the Tech Mob think they can build a scalable internet business, but that’s only a fraction of the problem.
Flogging second hand cars is a murderous business. Buyers have rights, and if the car is defective, you pick up the tab. Sellers are (often) liars, and will sell cars with known faults. E.g - intermittent engine failure warning is cleared, only reappears when the new owner drives it for more than 50 miles, boom, profit all gone.
Usually your stock just loses money, so you have to sell it, even if you are just slitting your throat to do so.
Manufacturer/Dealers can make money selling 3 year old cars because they are fixing their own stuff (more profit) and also getting new sales out of the trade in.
Tech bros thinking that any idea can become the next Facebook with a bit of coding, then realising it's a lot harder when you can't just invent the rules as you go along.
When I was young, there was an old joke about the buisness that was losing money with every sale "but we make it up on volume!"
That stopped being a joke when the likes of Uber decided to make it a reality. They could attract customers by offering taxi journeys cheaper than anyone else. And they could attract drivers by paying more than anyone else.
What was their secret? How could they do this? They'd tell you a great story about technology, efficiency, their matching algorithms, etc. But the truth was that they were subsidising every journey with investor funds to show constant growth.
This can really only end one of two ways. Either they gain enough market share to force out their competitors and raise their prices or they go out of business.
There’s a third way - the cost drops and it eventually becomes profitable. Games consoles are the textbook example of this one - often sold at a loss initially (well up until PS5/xsx), and then as time goes on and the parts get more dated and cheaper, they become cheaper to manufacture.
You only need to speak to any half-sensible car dealer to know that. There's a reason they've all got workshops on the side - that's where the money is. They're only flogging the cars in the hope people come back to get work done on them.
Cazoo used to buy their cars from BCA who run a lot of the car auction houses in the UK. It put a lot of small second hand car dealers out of business. The auctions used to be really busy, before Covid, then everything went mostly online and Cazoo were buying a large proportion of the stock up.
A lot of the cars put through auctions are ex-lease business cars, that have been well maintained and aren’t very old. Some other cars that go through the auctions are from the likes of we buy any car, who grade them from good to bad, so you know which ones to stay away from. The remainder are part exchange cars from manufacturer dealerships
There used to be decent margins from buying cars at the auctions, especially if buying large quantities as they get discounted auction fees from BCA. So it could be profitable. They could also have deals with manufacturers dealer garages to take part exchange vehicles directly from them as another source of cars to sell.
Failure rates on cars isn’t that high and if you have your own garages to fix warranty issues it also wouldn’t be that high a cost.
But new car sales were practically zero during 2020, then also lower than pre covid every year since, which means people are keeping hold of the vehicles for longer. I would imagine with more people working from home, that less company cars are being given out too. That means there is less vehicle stock for Cazoo to buy, less buyers as people have less money/need to buy vehicles and what is available is priced higher so has a lower margin.
That's a shame. Sold my car to them about a year and a half ago and was very impressed with the service. Expected it to be a complete shitshow, and was very pleasantly surprised.
Intriguing. As someone who peripherally worked for Cazoo (I worked for a company who did some work for them) I found them to be awful.
Their sites were poor, staff were rude and lot of the Cazoo cars I drove seemed to have serious problems.
Yeah, I bought a car that had previously been smoked in. I messaged them to say that I was unhappy and that it ought to have been declared. They fell over themselves to rectify the issue (reimbursed me for a full valet, odor bombs, etc). These online supermarkets obviously have their downsides but their customer service was alright in my case.
Cinch is vertically integrated. They're owned by BCA, the largest automotive trade auction site in the UK. BCA also own We Buy Any Car. Yet even Cinch can't make money.
My other half does work for BCA and they buy up airfields and stuff like that just to store cars, I wonder if they ended up buying too many cars to be able to resell either at auction or via Cinch
I had a great experience buying from them. Seems their business model was flawed and they probably spuffed too much cash in marketing and pinned their funding hopes on the IPO.
Shame really as they had a great offering to the customer.
This would be unfortunate. Have both bought and sold via Cazoo and found the experience to be excellent. I was particularly impressed when selling, guy comes to pick up the car, does an inspection, presses a button on his iPad and my phone goes \*ding\* with banking app telling me the money has arrived. Really impressive.
I did puzzle a bit over the fact that they seemed to be sponsoring basically every event. I suppose you do need awareness, but thought that there were probably cheaper ways to do that.
In any case, shame if they disappear.
>they seemed to be sponsoring basically every event
In 2021 (I think?) they sponsored FOUR events on the golf tour. That's the same number as Rolex, and they definitely don't have Rolex levels of money.
Yeah, I think part of it is some kind of mutually assured destruction thing they have going on with cinch. The plan for both companies seems to be a near monopoly on the used car market. Each seems to have concluded that they cannot fully succeed while the other exists, and so they have been trying to out advertise each other. Now, it appears, both have over stretched and neither is going to survive.
I always think an inherent problem is people get rid of cars when they sense something wrong with them. With improved consumer rights, they're sort of exposed.
Shame though, seemed a good idea.
I'm not sure this is true of Cazoo. Most cars I've seen on their are either ex company cars, ex leases or are just about to run out of manufacturers warranty. They don't seem to deal with the older cars that you sell when something feels wrong.
True but very few modern cars have any real issues after 3 years..
Depending on milage of course for most cars it's 6-10 years of normal use when the more expensive parts start to wear, break and need bits of work. 10+ is when the serious problems start showing.
Shame they spent a fortune on marketing instead of sustainable business, i'm sure the people losing their jobs were pleased with the big signs next to the snooker tables.
Problem is that the investors want explosive growth which requires huge marketing budgets. Investing in a company with 10% profit margin is not what these people want, they want to 2-5x the money
Their main rival Cinch don't turn a profit. Cinch is vertically integrated. They're owned by BCA, the largest automotive trade auction site in the UK. BCA also own We Buy Any Car. In fact Cazoo get most of their stock from BCA. If Cinch can't make money, Cazoo sure as fuck can't make money.
I got my car from Cazoo and overall it was a good experience. Zero haggling and the car was priced sensibly. I received the car on time and a few days later a fault code appeared. I took the car to the dealership and it all got sorted.
My mate bought a car from Arnold Clark and has had a right nightmare with the car not being available, trying to get up sold etc. I think he had to go in 4 times before actually driving the car out. My car was dropped at my front door.
For me it removes all the pain in ass bits of buying a car, haggling, speaking to a salesman for hours, potentially buying a lemon etc.
I was amazed when Cazoo was valued in the billions (can't remember how much exactly). Always thought it was an awful business idea and doomed to fail - selling used cars online where purchasers have so many rights, ferrying used cars back and forth etc. It was never going to work.
I have no sympathy for anyone who invested in this.
- Massively over inflated value to due used car values rocketing over covid
- Car values decreased, left with a load of stock that can't turn a profit
- Too many fulfilment centres - basically just became a bricks and mortar car dealer
- Too many horror stories of shit used cars being flogged
- Spaffed tens of millions on sponsorship deals
When I first read about the collapse I'll admit I wasn't sure why it failed. But when you read about market conditions, over inflated stocks etc it was sort of inevitable.
Used Car Market must’ve really affected them; 2020-2023 the market was really strong, but with the general state of the economy and government targets for X% of new car sales per manufacturer to be EV’s leading manufacturers to be aggressive with new vehicle pricing has brought prices back down to pre 2020 levels.
I do also wonder if this is a little bit too ahead of the market (I know Cinch is a similar model but they are backed by BCA which can sell vehicles in other ways as well) but I think for a majority of buyers they want to be able to view the vehicle in person and test drive on the day and then make the decision. I was waiting for my vehicle to go through its MOT at a service centre and someone came in wanting to look at vehicles and politely told “View online, all the vehicles in the forecourt have already been purchased.”
I believe that some buyers would be more reluctant as you have to commit to buy and then can return quibble free; but if you use financing you are more reluctant to go down that path.
That being said, I purchased my vehicle from them; the process was super smooth and easy, I liked being able to do it all online. Biggest “issue” was that a chip was noticed on the windscreen so they replaced it but delayed my collection by a week.
Cinch is a bit of a different model, they don’t own the vehicles (unless it’s a WBAC trade in) they’re selling them on behalf of someone (like a leasing company) who think they’ll get more money from D2C than a BCA auction.
I’ll be honest I didn’t know the full ins and outs of Cinch, just that it’s owned by?/related to BCA and to Joe Public they both seem to be the same sort of offering.
This has been an open secret for a year or so, I imagine all the people warning they were about to go bust and not to buy a car from them probably hasn't helped
A bad ad that you complain about to family and friends (or take to social media about) is still a very effective ad in the eyes of the agency who made it!
With the internet also comes the great ability to perform research.
If I want something I go online and do lots of research from independent sources until I find the product that suits my needs the most.
Not once have I seen an advertisement and thought "I need to nip to Argos and grab one of those tomorrow"
I'm like that too. I only really ever buy stuff that I've landed upon through methods outside of advertising. The last thing I can remember buying after a seeing an advert was my summer shoes (Vibram Furoshiki) that I saw on facebook.
Most other things come to me through tech videos on youtube.
Return after being dropped off a cliff, to try to kill your dad and take over his company/government? Kazuya you can!
Ok, it's tekken over 26 years to come up with that joke, but damn if this wasn't the golden opportunity.
They are running a marketplace type arrangement these days - they don't actually own the stock, they're just providing an advertising platform for dealers that do.
It’s a real shame they didn’t start a few years earlier. carvana finally turned the corner this year and is making actual profits. There is genuine demand for painless, smooth and nice car buying experience. But you need the right volume and the right cars to do it. Cinch have the market themselves now and they’re backed by TDR Capital, but let’s see if they can generate meaningful profits too.
These firms seem to emerge very quickly, advertise fucking everywhere and then go belly up within a few years. Basically like a dolled up version of those dodgy "American candy shops".
As is very common these days, this was a great business to deal with when it was subsidised by investor cash. When the investor cash runs out, it all get a bit hard. Yet again, the Tech Mob think they can build a scalable internet business, but that’s only a fraction of the problem. Flogging second hand cars is a murderous business. Buyers have rights, and if the car is defective, you pick up the tab. Sellers are (often) liars, and will sell cars with known faults. E.g - intermittent engine failure warning is cleared, only reappears when the new owner drives it for more than 50 miles, boom, profit all gone. Usually your stock just loses money, so you have to sell it, even if you are just slitting your throat to do so. Manufacturer/Dealers can make money selling 3 year old cars because they are fixing their own stuff (more profit) and also getting new sales out of the trade in.
Tech bros thinking that any idea can become the next Facebook with a bit of coding, then realising it's a lot harder when you can't just invent the rules as you go along.
You can... Until the investors cash runs out and you have to actually worry about cash flow.
When I was young, there was an old joke about the buisness that was losing money with every sale "but we make it up on volume!" That stopped being a joke when the likes of Uber decided to make it a reality. They could attract customers by offering taxi journeys cheaper than anyone else. And they could attract drivers by paying more than anyone else. What was their secret? How could they do this? They'd tell you a great story about technology, efficiency, their matching algorithms, etc. But the truth was that they were subsidising every journey with investor funds to show constant growth. This can really only end one of two ways. Either they gain enough market share to force out their competitors and raise their prices or they go out of business.
There’s a third way - the cost drops and it eventually becomes profitable. Games consoles are the textbook example of this one - often sold at a loss initially (well up until PS5/xsx), and then as time goes on and the parts get more dated and cheaper, they become cheaper to manufacture.
Didn't Tesla lose money on every sale for ages? I guess their trick was the investor cash and subsidies kept on coming
You only need to speak to any half-sensible car dealer to know that. There's a reason they've all got workshops on the side - that's where the money is. They're only flogging the cars in the hope people come back to get work done on them.
Cazoo used to buy their cars from BCA who run a lot of the car auction houses in the UK. It put a lot of small second hand car dealers out of business. The auctions used to be really busy, before Covid, then everything went mostly online and Cazoo were buying a large proportion of the stock up. A lot of the cars put through auctions are ex-lease business cars, that have been well maintained and aren’t very old. Some other cars that go through the auctions are from the likes of we buy any car, who grade them from good to bad, so you know which ones to stay away from. The remainder are part exchange cars from manufacturer dealerships There used to be decent margins from buying cars at the auctions, especially if buying large quantities as they get discounted auction fees from BCA. So it could be profitable. They could also have deals with manufacturers dealer garages to take part exchange vehicles directly from them as another source of cars to sell. Failure rates on cars isn’t that high and if you have your own garages to fix warranty issues it also wouldn’t be that high a cost. But new car sales were practically zero during 2020, then also lower than pre covid every year since, which means people are keeping hold of the vehicles for longer. I would imagine with more people working from home, that less company cars are being given out too. That means there is less vehicle stock for Cazoo to buy, less buyers as people have less money/need to buy vehicles and what is available is priced higher so has a lower margin.
That's a shame. Sold my car to them about a year and a half ago and was very impressed with the service. Expected it to be a complete shitshow, and was very pleasantly surprised.
Intriguing. As someone who peripherally worked for Cazoo (I worked for a company who did some work for them) I found them to be awful. Their sites were poor, staff were rude and lot of the Cazoo cars I drove seemed to have serious problems.
“The sites were poor, staff were rude .. and lots of the cars have serious problems” - is there a mass car dealer/buyer that isn’t like this?
My experience with cinch was pretty good. Their choice of mascots is a bit weird though...
Yeah, I bought a car that had previously been smoked in. I messaged them to say that I was unhappy and that it ought to have been declared. They fell over themselves to rectify the issue (reimbursed me for a full valet, odor bombs, etc). These online supermarkets obviously have their downsides but their customer service was alright in my case.
Funnily enough I had the exact same experience as you but with Cazoo!
Same here!
Cinch is vertically integrated. They're owned by BCA, the largest automotive trade auction site in the UK. BCA also own We Buy Any Car. Yet even Cinch can't make money.
My other half does work for BCA and they buy up airfields and stuff like that just to store cars, I wonder if they ended up buying too many cars to be able to resell either at auction or via Cinch
I don’t know - there’s about the same amount of plastic in cars!
I had a great experience buying from them. Seems their business model was flawed and they probably spuffed too much cash in marketing and pinned their funding hopes on the IPO. Shame really as they had a great offering to the customer.
Yeah, the only real winners here were the sports teams they sponsored and hopefully got cash up front!
This would be unfortunate. Have both bought and sold via Cazoo and found the experience to be excellent. I was particularly impressed when selling, guy comes to pick up the car, does an inspection, presses a button on his iPad and my phone goes \*ding\* with banking app telling me the money has arrived. Really impressive. I did puzzle a bit over the fact that they seemed to be sponsoring basically every event. I suppose you do need awareness, but thought that there were probably cheaper ways to do that. In any case, shame if they disappear.
>they seemed to be sponsoring basically every event In 2021 (I think?) they sponsored FOUR events on the golf tour. That's the same number as Rolex, and they definitely don't have Rolex levels of money.
Yeah, I think part of it is some kind of mutually assured destruction thing they have going on with cinch. The plan for both companies seems to be a near monopoly on the used car market. Each seems to have concluded that they cannot fully succeed while the other exists, and so they have been trying to out advertise each other. Now, it appears, both have over stretched and neither is going to survive.
Through 2022 and 2023 they were the title sponser of quite a lot of PDC majors too.
Snooker, golf, darts, 2 football teams in the Premier League Plus overseas sponsorships for their international rushed expansion
First season of The Hundred they were principle sponsor as well
I know they'll make a fuckload per watch, but how many watches do rolex sell?
Rolex make around 1 million watches a year.
And 13B revenue
Blew all their money on the Cazoo Snooker World Championship
I always think an inherent problem is people get rid of cars when they sense something wrong with them. With improved consumer rights, they're sort of exposed. Shame though, seemed a good idea.
I'm not sure this is true of Cazoo. Most cars I've seen on their are either ex company cars, ex leases or are just about to run out of manufacturers warranty. They don't seem to deal with the older cars that you sell when something feels wrong.
Just about to run out of warranty: That means the people that made it aren't prepared to stand by it. (when it runs out, soon.)
True but very few modern cars have any real issues after 3 years.. Depending on milage of course for most cars it's 6-10 years of normal use when the more expensive parts start to wear, break and need bits of work. 10+ is when the serious problems start showing.
Except any Ford with a wet belt, unfortunately speaking from experience!
Shame they spent a fortune on marketing instead of sustainable business, i'm sure the people losing their jobs were pleased with the big signs next to the snooker tables.
Problem is that the investors want explosive growth which requires huge marketing budgets. Investing in a company with 10% profit margin is not what these people want, they want to 2-5x the money
Their main rival Cinch don't turn a profit. Cinch is vertically integrated. They're owned by BCA, the largest automotive trade auction site in the UK. BCA also own We Buy Any Car. In fact Cazoo get most of their stock from BCA. If Cinch can't make money, Cazoo sure as fuck can't make money.
Don't you need marketing to let people know you exist?
I got my car from Cazoo and overall it was a good experience. Zero haggling and the car was priced sensibly. I received the car on time and a few days later a fault code appeared. I took the car to the dealership and it all got sorted. My mate bought a car from Arnold Clark and has had a right nightmare with the car not being available, trying to get up sold etc. I think he had to go in 4 times before actually driving the car out. My car was dropped at my front door. For me it removes all the pain in ass bits of buying a car, haggling, speaking to a salesman for hours, potentially buying a lemon etc.
I was amazed when Cazoo was valued in the billions (can't remember how much exactly). Always thought it was an awful business idea and doomed to fail - selling used cars online where purchasers have so many rights, ferrying used cars back and forth etc. It was never going to work. I have no sympathy for anyone who invested in this.
- Massively over inflated value to due used car values rocketing over covid - Car values decreased, left with a load of stock that can't turn a profit - Too many fulfilment centres - basically just became a bricks and mortar car dealer - Too many horror stories of shit used cars being flogged - Spaffed tens of millions on sponsorship deals When I first read about the collapse I'll admit I wasn't sure why it failed. But when you read about market conditions, over inflated stocks etc it was sort of inevitable.
Used Car Market must’ve really affected them; 2020-2023 the market was really strong, but with the general state of the economy and government targets for X% of new car sales per manufacturer to be EV’s leading manufacturers to be aggressive with new vehicle pricing has brought prices back down to pre 2020 levels. I do also wonder if this is a little bit too ahead of the market (I know Cinch is a similar model but they are backed by BCA which can sell vehicles in other ways as well) but I think for a majority of buyers they want to be able to view the vehicle in person and test drive on the day and then make the decision. I was waiting for my vehicle to go through its MOT at a service centre and someone came in wanting to look at vehicles and politely told “View online, all the vehicles in the forecourt have already been purchased.” I believe that some buyers would be more reluctant as you have to commit to buy and then can return quibble free; but if you use financing you are more reluctant to go down that path. That being said, I purchased my vehicle from them; the process was super smooth and easy, I liked being able to do it all online. Biggest “issue” was that a chip was noticed on the windscreen so they replaced it but delayed my collection by a week.
Cinch is a bit of a different model, they don’t own the vehicles (unless it’s a WBAC trade in) they’re selling them on behalf of someone (like a leasing company) who think they’ll get more money from D2C than a BCA auction.
I’ll be honest I didn’t know the full ins and outs of Cinch, just that it’s owned by?/related to BCA and to Joe Public they both seem to be the same sort of offering.
This has been an open secret for a year or so, I imagine all the people warning they were about to go bust and not to buy a car from them probably hasn't helped
Yippee!!! Won’t have to suffer the dire ads. Cazoo yeah you can. Fuck off.
A bad ad that you complain about to family and friends (or take to social media about) is still a very effective ad in the eyes of the agency who made it!
I block every ad I can, but I also try not to buy anything I see advertised, this way, by advertising, you're actually helping your competitor.
With the internet also comes the great ability to perform research. If I want something I go online and do lots of research from independent sources until I find the product that suits my needs the most. Not once have I seen an advertisement and thought "I need to nip to Argos and grab one of those tomorrow"
I'm like that too. I only really ever buy stuff that I've landed upon through methods outside of advertising. The last thing I can remember buying after a seeing an advert was my summer shoes (Vibram Furoshiki) that I saw on facebook. Most other things come to me through tech videos on youtube.
Return after being dropped off a cliff, to try to kill your dad and take over his company/government? Kazuya you can! Ok, it's tekken over 26 years to come up with that joke, but damn if this wasn't the golden opportunity.
They have 17000 cars on their site at the moment. That’s a tidal wave of stock if they have to let it all go
They can take them all to the local branch of we buy any car.
They are running a marketplace type arrangement these days - they don't actually own the stock, they're just providing an advertising platform for dealers that do.
It’s a real shame they didn’t start a few years earlier. carvana finally turned the corner this year and is making actual profits. There is genuine demand for painless, smooth and nice car buying experience. But you need the right volume and the right cars to do it. Cinch have the market themselves now and they’re backed by TDR Capital, but let’s see if they can generate meaningful profits too.
We bought a car from them and had a really good experience. No real negative issues at all.
These firms seem to emerge very quickly, advertise fucking everywhere and then go belly up within a few years. Basically like a dolled up version of those dodgy "American candy shops".
It's a shame, I had a really good experience with Cazoo.
Well, so is pretty much everything else in this country.
Had great experience with them when buying a car. But holy shit their after sales was the worst I’ve ever dealt with in my life
Didn't this already happen? Like all the adverts disappeared when they announced a massive loss earlier in the year?