Mike Allen, managing director of Cambria Private Capital, discusses the withdrawal of Cazoo from the used car market and its pivot into an online marketplace to compete with AutoTrader – a move that has been met with some 'schadenfreude' by dealers across the country.

There is no doubt that Cazoo made some bold claims about the power of its model and the dim future for traditional dealers. None of those claims have come to pass, but has Cazoo's impact on the industry been entirely negative?

The majority of dealers had online sales operations to some degree before Cazoo arrived and, arguably, the high-profile competition, alongside lockdowns during the pandemic, accelerated plans in this area.

An omnichannel approach has won out, and it makes sense when it offers the customer the widest choice of vehicle buying options. It's clear that dealers are in a much stronger position now than before Cazoo burst onto the scene with robust online offerings that reach a broader market and provide a great buyer experience.

Cazoo's growth demonstrated the potential for online car sales, encouraging other companies to invest more in their online presence and potentially expand the market for online car purchases.

As Cazoo grew, it likely created job opportunities both directly within the company and indirectly through its supply chain and support services.

Talent

There will also be a fresh injection of talent into the industry as Cazoo unwinds its operations as remarketing, refurbishment, logistics and customer service professionals re-enter the market. The lessons they've learnt, good and bad, will serve the sector well in the years to come.

The de-fleet and remarketing sector will face a short-term hurdle in capacity as Cazoo's facilities go offline. However, there are sure to be interested parties who step in and develop these sites with fresh investment. The outcome is likely to be a stronger industry as a result.

The consumer may be the clearest winner in this tale. Cazoo's business model aimed to simplify the process of purchasing a used car by offering an online platform where customers could browse, purchase, and even finance vehicles entirely online, with delivery to their doorstep. The expectation was set, and some of the naysayers who argued that buyers would always want to visit a forecourt in person were proved wrong.

Digital channels allow automotive retailers to reach a broader audience beyond their physical locations, which helps to create a more robust and flexible business. Online marketing and sales platforms enable them to target and engage potential customers across geographical boundaries, increasing market penetration and sales opportunities.

Digital tools collect vast amounts of data on customer preferences, buying behaviour, and market trends. By analysing this data, dealers can gain valuable insights into consumer preferences, inventory management, and pricing strategies, enabling them to make more informed business decisions and optimise their operations. Indeed, larger dealers are expanding their data insight departments to drive better decisions across the business.

Automation

Automation and digitisation streamline various processes within automotive retail, such as inventory management, sales transactions, and customer support. It improves operational efficiency, reduces manual errors, and lowers overhead costs, ultimately enhancing profitability. This trend has accelerated in recent years, and dealers are already seeing the benefits.

The integration of multiple sales channels, including websites, mobile apps, social media platforms, and physical dealerships, into a seamless omnichannel experience enhances brand consistency and customer satisfaction. It helps dealers get closer to their customers and create longer-term relationships with greater lifetime value.

With the rise of digital technologies, consumer preferences and shopping behaviours constantly evolve. Automotive retailers are better positioned to embrace digital transformation and can adapt more effectively to these changes, staying relevant and competitive in the market.

The UK dealer model has been underestimated for decades by investors but has proven to be incredibly resilient and flexible around consumer and OEM needs. The advances made over recent years will have a profound impact on efficiency over the decades to come.

Mike Allen is the managing director of Cambria Private Capital, a firm that invests in and provides advisory services to automotive startups and scaleups.