BCA cinch platform accused of ‘monetising dealers’

BCA has been met with a backlash from car dealers following its decision to relaunch its cinch marketing platform as an online car retailer perceived to be in direct competition with its traditional remarketing customers.

One retailer accused the remarketing giant of “opening Pandora’s Box” by going to market with the new offering which will go head-to-head with Cazoo and traditional dealers which have accelerated their digital sales strategies in response to COVID-19.

One retailer told AM: “They have opened Pandora’s Box and they may well reap their just desserts.

“Many businesses in many sectors of business have considered taking on their customers in the past and the wise ones have thought better of it. Clearly BCA has decided that the rewards are greater than the risks in this case.”

Launched in July 2019 as a rival to Auto Trader, the cinch sales platform has now evolved, offering car buyers a choice of more than 4,000 cars for sale, some of which are dealer stock.

Cinch promises free home delivery and a 14-day money back guarantee in a model which emulates that of BCA customer Cazoo.

Last summer, Cazoo signed an exclusive agreement with BCA for a dedicated vehicle preparation site in Corby, Northamptonshire, with capacity to store more than 6,000 cars and prepare more than 50,000 cars per year.

Speaking to AM, Cazoo founder Alex Chesterman insisted BCA’s shift into the role of competitor “doesn’t affect our relationship at all”.

But some of the retailers that spoke to AM about BCA’s decision to become a retailer said they were ready to reconsider their remarketing partnership as a result.

Many objected to a business model that invited them to buy stock that would be exclusively marketed on the cinch platform in return for a share of the resulting profit.

BCA’s relaunch of cinch comes just weeks after the remarketing giant launched a new “Retail Ready” stock channel. Now it appears that BCA’s car retail customers could be asked to fund stock sold via cinch on the one hand, while competing with consumers to buy vehicles on the other, said one concerned trader.

Cool reception

A short statement issued to AM by BCA said that cinch helps its dealer partners “increase their offering to consumers without additional investments in infrastructure, stockholding and marketing”.

But one franchised retail group director said he felt cinch was “cutting our legs away” and “monetising dealers” by using them as a stock funding tool.

He added: “From my point of view why would I hand over my money to fund cars for cinch to sell?”

Eddie Hawthorne, chief executive of Arnold Clark, said his business had no use for the cinch platform as its in-house digital channels were delivering strong results. But while he said that BCA’s move into retail would not affect remarketing relationship with the top AM100 group, that stance could change if the venture proved a success, shifting its position to that of a “rival”.

Swansway Garages has a long-held remarketing relationship with BCA but has declined the opportunity to work with the cinch retail platform after discussing terms with cinch retail director, Jason Cranswick.

Director Peter Smyth (pictured right) said that BCA’s move into the retail sector had also been enough to consider another remarketing partner.

He said: “What they are wanting us to do is for us to fund and own the stock that they advertise and sell. We are already in the business of selling our cars ourselves and to my mind there are better places that I can deploy those funds.

“I was told we would not be able to advertise the cars on any other marketing platform for 60 days if we went with cinch. Normally we only hang on to our cars for 60 days before we get rid of them, so that’s not a gamble I’m willing to take.”

Smyth added: “What I’d say to the team at cinch is ‘good luck’. It’s irritating that they’ve done this more than anything. I think this is another case of ‘vulture capitalists’ trying to squeeze more out of the automotive retail sector.”

BCA was unable to field anyone to comment on cinch’s move into retail in the week prior to AM’s publication.

However, a statement from Cranswick, who made the move from his role as Jardine Motor Group’s former commercial director back in August, said: “We have worked in partnership with our dealer customers to develop a direct-to-consumer (D2C) e-commerce platform that meets both consumer and dealer needs and will deliver flexibility and increased profit opportunities in an increasingly digitised post-COVID-19 market.”

Push for growth

Some automotive retail sector investors have suggested that BCA’s move had come as a direct result of Cazoo’s success in attracting £450m in venture capital funding and a valuation of more than £2bn in early October.

“Previously, BCA’s owners must have looked at their business and thought ‘we have all this infrastructure and a huge wage bill and yet Auto Trader is making huge amounts without getting its hands dirty’, so they launch cinch as a rival,” one told AM.

“This year it has seen the valuation of Cazoo and shifted its sights.

“BCA is extremely good at what it does, but it’s an old-world business trying to figure out new world business and how they can take a piece of that pie.”

BCA Marketplace was bought by private equity firm TDR Capital for £1.9bn in September last year.

Completion of the sale came in the same month that the business posted annual financial results for the year to March 31, 2019, which showed turnover up by 24.5%, from £2.43bn to £3.03bn, and adjusted EBITDA up to £172m from £160m.

Costs of £2.5m were attributed to the creation of the cinch marketing platform, meanwhile.

In its 2019 report, BCA said cinch was the first step in a process which, it hoped, would “remove the faff that consumers feel exists today”.

It said that it held unrivalled vehicle data resulting from the eight million used car transactions it dealt with each year and one million vehicles which pass through its auctions, while attracting 20 million private car owners to its WeBuyAnyCar website.

At that stage, it said that the cinch online marketplace had been developed for an estimated 3.4 million consumers that wanted a more intuitive online used car search.

Remarketing conflict?

Cazana director of insights, Rupert Pontin, highlighted that cinch’s reinvention was not the first time BCA had chosen to go head-to-head with its car dealer customers, pointing to the acquisition of WeBuyAnyCar back in 2013.

WeBuyAnyCar encourages motorists to sell to it rather than part-exchange their car.

Pontin said: “It doesn’t sit comfortably. If I was a retailer, I’d be slightly peeved to put it mildly.

“It’s another big force with an awful lot of money behind it coming into an already crowded retail sector.

“While many might dismiss cinch, for the time being it does raise questions about the stock they might be holding back from wholesale auctions to offer to retail customers, rather than dealers.

“At a time when supply is tight, a lack of choice is the last thing that any trader would like to see.”

Martin Forbes, the president of BCA rival Cox Automotive International, moved quickly to guarantee his business would not move into retail just a short time after a Sunday Times article on October 18 broke the news of BCA’s new cinch offering.

Forbes said his phone had been “ringing off the hook” with car retail group bosses keen to learn of its stance on direct sales.

He said: “The strategy that is being followed by (BCA) puts them front and centre in a position of conflict with a lot of their customers.

“Cox Automotive will not go into direct retail. For years it’s a question we have been asked and it’s important, as it has been for a number of years, to make our stance clear.”

Forbes pointed to the Cox Automotive business’s sale of the Motors.co.uk brand and the recent disposal of its Cars Guide and Auto Trader brands in Australia – again to eBay Gumtree – as a reassertion of this move away from any potential conflict with its car retail customers.

“We want to partner with our customers and help them navigate a fast-changing digitally-driven retail environment,” he said.

Forbes said that he expected Cox Automotive to benefit from BCA’s new direction with cinch.

“It has to drive opportunity for us in the marketplace,” he said.

“At board level some car retailers will be considering whether they want to continue to do business with someone they are also competing with.”