"The end of haggling with a used-car salesman" ?
Discussion
www.cazoo.co.uk - an online used car service has become UK's faster ever 'Unicorn' - i.e. worth $1 billion.
Pro's - the actual process looks great and they really push peace of mind. They quote the Daily Mail; "The end of trekking round vehicle lots and haggling with a used-car salesman"
Con's - limited brands and poor on 'older' used cars. But beyond that I'm struggling to see too many disadvantages. I think they will make life increasingly difficult for the traditional dealerships who handle new-ish mass market cars. But I wonder how cazoo would encroach on the 'expert' or niche players. They are not the answer to my prayers at the moment.
Discuss!
Pro's - the actual process looks great and they really push peace of mind. They quote the Daily Mail; "The end of trekking round vehicle lots and haggling with a used-car salesman"
Con's - limited brands and poor on 'older' used cars. But beyond that I'm struggling to see too many disadvantages. I think they will make life increasingly difficult for the traditional dealerships who handle new-ish mass market cars. But I wonder how cazoo would encroach on the 'expert' or niche players. They are not the answer to my prayers at the moment.
Discuss!
Don't see how they can be worth $1 Billion when they don't yet have many cars on the books or turnover.
Perhaps they may spend some of their funding undercutting the competition in a bid to gain dominance in the sector?
Guessing that they get the investment capital due to the finance they offer which imo seems pretty steep.
Perhaps they may spend some of their funding undercutting the competition in a bid to gain dominance in the sector?
Guessing that they get the investment capital due to the finance they offer which imo seems pretty steep.
websites example said:
Representative example (PCP)
Borrowing £9,000 with a £1,000 deposit at a representative APR of 8.9%.
Fixed rate of interest
4.33%
36 monthly payments
£178.68
Total amount payable
£11,782.13
Cost of credit
£1,782.13
Optional final payment
£4,349.65
Annual mileage limit
10,000 miles
Excess mileage charge
6p/mile
Borrowing £9,000 with a £1,000 deposit at a representative APR of 8.9%.
Fixed rate of interest
4.33%
36 monthly payments
£178.68
Total amount payable
£11,782.13
Cost of credit
£1,782.13
Optional final payment
£4,349.65
Annual mileage limit
10,000 miles
Excess mileage charge
6p/mile
Had a look trying to work out what this actually is expecting something revolutionary. I concluded it's a standard online dealer of up to 8 year old cars.
It doesn't look anywhere near worth $1 billion, £5million would be generous. In fact I wouldn't be surprised if the car supermarket places just adapted slightly to compete. They are doing almost nothing different now except the nationwide delivery service. It's not going to stop people selling/buying their cars on eBay/Autotrader/Facebook/PH/local dealer.
It doesn't look anywhere near worth $1 billion, £5million would be generous. In fact I wouldn't be surprised if the car supermarket places just adapted slightly to compete. They are doing almost nothing different now except the nationwide delivery service. It's not going to stop people selling/buying their cars on eBay/Autotrader/Facebook/PH/local dealer.
[quote=untakenname]Don't see how they can be worth $1 Billion when they don't yet have many cars on the books or turnover.
Perhaps they may spend some of their funding undercutting the competition in a bid to gain dominance in the sector?
Guessing that they get the investment capital due to the finance they offer which imo seems pretty steep.
You're right - finance does look high. Maybe no profit on the cars ?
The founder has previous; he started LoveFilm and Zoopla. So the bet is he will grow this too. For contrast Lookers dealership business, with £4 billion revenue is valued at around a tenth of cazoo.
Perhaps they may spend some of their funding undercutting the competition in a bid to gain dominance in the sector?
Guessing that they get the investment capital due to the finance they offer which imo seems pretty steep.
You're right - finance does look high. Maybe no profit on the cars ?
The founder has previous; he started LoveFilm and Zoopla. So the bet is he will grow this too. For contrast Lookers dealership business, with £4 billion revenue is valued at around a tenth of cazoo.
I worked with Powa Technologies some years ago. They were valued at $2.6bn in 2014.
By early 2016 I was threatening to sue over invoices worth just a couple of grand. They got paid, but the business sank without trace shortly thereafter. Turns out the valuation was their own - so colour me sceptical, but...
By early 2016 I was threatening to sue over invoices worth just a couple of grand. They got paid, but the business sank without trace shortly thereafter. Turns out the valuation was their own - so colour me sceptical, but...
Xaero said:
It's not going to stop people selling/buying their cars on eBay/Autotrader/Facebook/PH/local dealer.
I suppose that’s what they’re after - that whole market, in a single place.A lot of the valuation will be based on the reputation of the bloke at the helm and the track record of the investors on board.
I work for a small independent dealer that typically carry 20 -30 cars in stock. Every month we'll have a couple of customers who deal on Cazoo terms; "I can see the description, answer me a few questions and I'll buy if you can deliver it to me". We don't ship cars 'on approval' so the cars are paid for before they leave out premises. We would be happy and are able to do all our business like this if only all the customers would be too.
Cazoo set up before the Covid lockdown but as a result of that many dealers have been actively offering 'remote' transactions which mirror Cazoo's model and have had some success.
Perhaps Cazoo's greatest influence will be on the behaviour of consumers, an increasing number of whom will be willing to buy a car without touching, feeling and fretting first.
Cazoo set up before the Covid lockdown but as a result of that many dealers have been actively offering 'remote' transactions which mirror Cazoo's model and have had some success.
Perhaps Cazoo's greatest influence will be on the behaviour of consumers, an increasing number of whom will be willing to buy a car without touching, feeling and fretting first.
Edited by Wooda80 on Monday 29th June 10:33
kevinon said:
Let's see how customers gain confidence in online.
Covid will have played a part.
What surprises me is how successful de beers is - personally I cannot imagine buying high-end jewellery online
Totally different to a mechanically complicated, used item such as a car, that sits outside in hostile conditions, heat, cold, snow, rain etc.Covid will have played a part.
What surprises me is how successful de beers is - personally I cannot imagine buying high-end jewellery online
The 7 day, no quibble returns policy with Cazoo will be their downfall.
The costs involved in preparing the car, delivering it, collecting it back, re prepping it etc, will be a disaster.
These are used cars, give a member of the public an inch and they will take a mile.
kevinon said:
What surprises me is how successful de beers is - personally I cannot imagine buying high-end jewellery online
Whichever way you buy a diamond there's a very good chance it's been explored, mined, refined or sold by De Beers. You know selling online's only a very small part of De Beers right?Wooda80 said:
I work for a small independent dealer that typically carry 20 -30 cars in stock. Every month we'll have a couple of customers who deal on Cazoo terms; "I can see the description, answer me a few questions and I'll buy if you can deliver it to me". We don't ship cars 'on approval' so the cars are paid for before they leave out premises. We would be happy and are able to do all our business like this if only all the customers would be too.
Cazoo set up before the Covid lockdown but as a result of that many dealers have been actively offering 'remote' transactions which mirror Cazoo's model and have had some success.
Perhaps Cazoo's greatest influence will be on the behaviour of consumers, an increasing number of whom will be willing to buy a car without touching, feeling and fretting first.
Does the distance selling act apply to online car sales?Cazoo set up before the Covid lockdown but as a result of that many dealers have been actively offering 'remote' transactions which mirror Cazoo's model and have had some success.
Perhaps Cazoo's greatest influence will be on the behaviour of consumers, an increasing number of whom will be willing to buy a car without touching, feeling and fretting first.
Edited by Wooda80 on Monday 29th June 10:33
I bought an Astra about 15 years ago from an online only place. You bought the car without a test drive and then had 7 days to return. I had to collect the car from a big warehouse in Leeds IIRC.
They went bust around 12 months later.
Aren't pre-listing valuations derived from the investment value to shares purchased ratio? Hmm.. can't see anything wrong with that
They went bust around 12 months later.
Aren't pre-listing valuations derived from the investment value to shares purchased ratio? Hmm.. can't see anything wrong with that
Mexman said:
The 7 day, no quibble returns policy with Cazoo will be their downfall.
This might actually be quite clever.But what proportion of your customers are seeking to reject the car after 7 or even 14 days?
And out of those, how much easier would it be if, rather than you or I being judged a success or a failure on how well we dispute or remedy the rejection ( prize for success= £0, prize for failure = loss of commission) there was just a policy to uplift and refund.
Now take it a stage further to all those complaints that don't want a refund but there's something that's not quite to their liking. Rather than all the time we spend trying to appease those it's much easier . If it's that bad then send it back!
Mexman said:
Totally different to a mechanically complicated, used item such as a car, that sits outside in hostile conditions, heat, cold, snow, rain etc.
The 7 day, no quibble returns policy with Cazoo will be their downfall.
The costs involved in preparing the car, delivering it, collecting it back, re prepping it etc, will be a disaster.
These are used cars, give a member of the public an inch and they will take a mile.
Yes, reverse logistics cost would be a disaster. 7 days no-quibble is fool-hardy, unless they plan to describe stock fairly and match market rates to minimise returns.The 7 day, no quibble returns policy with Cazoo will be their downfall.
The costs involved in preparing the car, delivering it, collecting it back, re prepping it etc, will be a disaster.
These are used cars, give a member of the public an inch and they will take a mile.
If they do act transparently wouldn't this solve the problem?
Or would Joe Public would still be difficult to deal with ?
sebdangerfield said:
Whichever way you buy a diamond there's a very good chance it's been explored, mined, refined or sold by De Beers. You know selling online's only a very small part of De Beers right?
Sure - my surprise is that buyers even contemplate online for diamonds, rather than the theatre of real-life retail. kevinon said:
Mexman said:
Totally different to a mechanically complicated, used item such as a car, that sits outside in hostile conditions, heat, cold, snow, rain etc.
The 7 day, no quibble returns policy with Cazoo will be their downfall.
The costs involved in preparing the car, delivering it, collecting it back, re prepping it etc, will be a disaster.
These are used cars, give a member of the public an inch and they will take a mile.
Yes, reverse logistics cost would be a disaster. 7 days no-quibble is fool-hardy, unless they plan to describe stock fairly and match market rates to minimise returns.The 7 day, no quibble returns policy with Cazoo will be their downfall.
The costs involved in preparing the car, delivering it, collecting it back, re prepping it etc, will be a disaster.
These are used cars, give a member of the public an inch and they will take a mile.
If they do act transparently wouldn't this solve the problem?
Or would Joe Public would still be difficult to deal with ?
Free car for 7 days, no quibble return, on a 8 yr old used car that the customer only sees for the first time when it lands on their driveway?
Recipe for disaster if you ask me, like has been said, so many have attempted this kind of set up before, and it always fails when the investors dont double their money as expected within the first year, 2 years.
Cazoo have no USP, they only have 1,760 cars in stock at present, whereas a local supermarket have 1,000 cars in stock and 5,000 nationally, and best of all to an investor they have a scalable model. The supermarket offer a completely online and home delivery service, but also click and collect and viewing and test drives if you prefer that. I know which one I would use, especially in the unlikely event of a problem there is a physical presence just a few miles away.
The valuation* is no doubt based on Cazoo being a tech company rather than a used car outfit, and as such will be based on an outrageous multiple of predicted future earnings with nothing to back up the prediction but a hope that it will be sold to Google or another tech giant before anything hits the fan. Value it on 10x current earnings (if there are any) and that is probably an over-estimate of what it is really worth
The valuation* is no doubt based on Cazoo being a tech company rather than a used car outfit, and as such will be based on an outrageous multiple of predicted future earnings with nothing to back up the prediction but a hope that it will be sold to Google or another tech giant before anything hits the fan. Value it on 10x current earnings (if there are any) and that is probably an over-estimate of what it is really worth
Edited by Justin Case on Monday 29th June 12:11
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