Is it right to say that an organisation has done phenomenal things despite it making what can only be classed as massive losses? The title of this blog is taken from the heading in an article in Car Dealer Magazine as a quote from someone discussing Cazoo and Cinch, the online used car dealers classified as online disruptors. The article is here
The article states that Cinch posted a £181m loss in 2023, from a turnover of more than £1bn whilst Cazoo have warned they face going out of business due to limited liquidity. Yet the person quoted (a car dealer who was Retail Operations Director briefly for Cazoo when they started operating) says they have done phenomenal things in the sector. Reading his views it seems to me that they have converted what he classifies as proactive showroom visitors into digital adopters – they may well have been successful in doing that. But there seems to be an issue because car dealers have made profits from proactive showroom visitors, whilst the digital adopters aren’t paying prices sufficiently high to cover costs – indeed they fall a long way short of that.
The article also say that “They also spent tens of hundreds of millions on marketing, hence what Cinch has said in its statement that it is continuing to invest in marketing, because people are now confident buying cars that way”. Apart from the fact he is talking about promotion, and specifically advertising, rather than marketing that doesn’t seem particularly sensible – if spending those hundreds of millions has led Cazoo to near bankruptcy it seems they have been targeting the wrong customers.
I wish both companies well, but will finish with the comment made by another car dealer in his post about the article which alerted me to it “Yep, they have made the rest of the Motor Trade look good,”