The Cazoo derby, which both Villas have won this season, was the product of lightning-fast marketing as the new company and its rivals struggled to disrupt the used car market. However, Cazoo employees could believe the money would have been better spent elsewhere: the company cut 750 jobs on Thursday, warning that a recession could delay its first profits. The company’s races are part of a wider stock market disaster, but Cazoo is not the only used car dealer online. A steady stream of bad news has raised questions about whether the eruption caused by the coronavirus pandemic in online car sales can be sustained. In the US, Carvana laid off 2,500 workers last month and its market value fell from $ 64 billion (52 52 billion) in August 2021 to less than $ 5 billion, a drop of 92%. The stock market value of its smallest rival in the US, Vroom, has fallen by 98% since September 2020. In the United Kingdom, Peter Waddell, the founder of Carzam, blamed rival Cazoo’s problems for its inability to raise more investment. forcing him to put the launch on the market last week. Cazoo’s value fell from $ 7 billion last year when it listed its stake in New York through a $ 900 million cash-strapped merger. Rising interest rates, which tend to make investors focus on short-term survival rather than long-term growth potential, have explained some of the decline in shares of digital companies, ranging from online car dealerships to prominent winners. Peloton Exercise Bike and Ocado Grocery Retailer. However, analysts are increasingly wondering if the online revolution could overturn the used car industry in the same way as other forms of retail. Data from Dealogic show that car mergers and acquisitions fell from $ 10.6 billion in 2021 to $ 1.8 billion in the first half of 2022, putting the industry on track for its slowest pace. from 2017. “The gap between the digital model and the old retail stores is closing so fast,” said Ian McMahon, an associate at UHY Hacker Young. Traditional car dealers had a hard time during the lockdown, but now they have spent on upgrading their systems and can offer the same services. Sponsored by Cinch in a tennis tournament at Queen’s Club, England. Photo: Luke Walker / Getty Images for LTA One of the main attractions of e-commerce is the lower cost, compared to operating an extensive and expensive network of stores. But you just have to look at sports again to see how cost savings can be quickly spent elsewhere, McMahon said. There are potential Cazoo football derbies in France and Spain – not to mention darts, rugby, cricket, snooker, horse racing, golf and even fishing, although Cazoo’s sponsorship of Everton has now expired, it was replaced last week. Stake .com casino and sports betting platform. British rival Cinch, part of Europe’s largest used car dealer Constellation Automotive, owns English cricket, Scottish football and Northampton Saints rugby. Carvana has a Nascar driver and even a pickleball tournament – as well as an advertising spot in the American Football Superbowl, a rite of passage for companies that want to show that they have come a long way. Online marketers need a lot more potential buyers to make the same number of sales. The percentage of visitors who are converted to online shoppers is believed to be around 1%, compared to 30% for physical agents. Cazoo spent 65 65 million on marketing in fiscal year 2021 – or more than 1.3 1,300 per vehicle sold. Profits from each car were just 4 124, less than a tenth of what traditional dealerships can do, according to a veteran of the industry. Combining their chain stores with more sophisticated online features could give traditional dealers more leverage, said Olaf Sakkers, co-founder of RedBlue, a venture capitalist focused on transportation. Used car sales are particularly difficult to sell entirely online because of the confusing combination of options available to each model, and some of the digital habits created out of necessity during lockdowns have not endured, he added. “The pendulum has never really swung,” said Robert Forrester of Vertu Motors, Britain’s fifth-largest dealer selling new and used cars. “The net online retail sale of used cars has not been adopted by the vast majority of people in the UK,” he said. “Pure online retailers can not test drive. I think this is a fundamental flaw. “ Vertu gives customers the choice of both physical, online or hybrid. Of the 89,000 used car sales at Vertu last year, only 900 went off without a show at some point. “Bricks and clicks are the way forward,” Forrester said. “Dot. End of it.” Cars are the biggest purchases most people make after a home. This means that the classic online shipping model from a remote warehouse is not viable. Online marketers have quietly recognized this by buying physical dealerships to serve as collection points. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk Mike Allen, head of research at Zeus Capital, an investment bank, said having a salesperson to guide people could be especially useful for electric cars, which are unknown to the vast majority of buyers. Tom Leathes, CEO of Motorway, continues to hire in his online car sales platform, which allows people to auction off their cars to professional dealers. His company does not face the financial risks associated with finding and owning shares that could be devalued, but said the trend has been reversed for other start-ups seeking to finance heavy asset growth models. “We have seen a change in this climate, for sure,” he said. “Nobody wants to raise money right now.” However, Leathes added that he believes the upheaval in the used car industry from online sales will be permanent. “The auto industry has lagged behind in almost all major consumer sectors for a long time,” Leathes said. “We are still at the beginning of the transition to the internet economy.”
