Cazoo investors misread market potential for online-only retail

Cazoo's collapse is being blamed on the limited potential for online-only motor retail, according to research from July's Startline Used Car Tracker,

Additionally, 37% believed investors overestimated the efficiencies that technology could provide, and 35% felt that investors failed to recognise that existing dealers were already adept at selling online.

Moreover, 34% cited poor timing of Cazoo's launch due to the pandemic, 23% pointed to existing retailers improving their game in response to Cazoo and other online-only entrants, and another 23% felt that Cazoo underestimated the strength of established dealers.

Paul Burgess, CEO at Startline Motor Finance, commenting, said: “The trajectory of Cazoo has been closely monitored by nearly everyone in car retail as it was arguably the most ambitious and certainly the best-funded of the new online-only dealers. It's intriguing to see what others in the sector believe led to the business's failure.

“Our research indicates a mix of circumstances and a general misreading of the market by investors. Dealers think that while the impact of Covid was unpredictable, the potential for online-only retail and new technology was overestimated, and the strengths of existing dealers were underestimated.