07 May 2022

Cazoo returns rate revealed in annual results

Online used car dealer Cazoo lost £549.2 million before tax during 2021, according to the firm’s annual results. Turnover for the year stood at £667.8m, up from £162.2m in 2020 when it ‘only’ lost £99.8m.

The results come several days after the first quarter figures for 2022 and highlight a significant downturn in gross profit per unit. During 2021 this stood at £427 (well below average market figures) but fell to £124 for Q1 2022. However, the company claims this figure will improve in Q2.

The results document, filed with the US markets regulator the Securities and Exchange Commission, included a host of warnings about what could impact the business, including the point that it may never make a profit, which one industry accountant described as “standard for this kind of business”.

However, the results did reveal 5.2% of customers return a car and that the company, which sold 34,731 cars to retail buyers, spent more than £65m on marketing – equivalent to £1,878 per car.

Cazoo reported it spent £240.7m on reconditioning which would give a per-car-sold figure of almost £7,000. However, this figure also includes third-party reconditioning for customers of the Smart Fleet Solutions business it bought in February last year. These customers will not continue beyond 2022.

Cazoo also revealed it took 563 website visitors to sell one car in 2021. This figure was down from 763 in 2020.

* Read the full analysis of the Cazoo results in the May issue of Auto Retail Bulletin. Sign up for a free trial here if you’re not already a subscriber

 

Carzam ‘running out of road’

Carzam has been “scrambling to find a buyer” in recent weeks – without success, according to The Sunday Times.

In November 2021, it claimed to have raised £112m from New York hedge fund Davidson Kempner; however, this was as debt, not equity. The funds were to help quickly scale the business.

Co-founder Peter Waddell, chairman Andy McCue and chief executive Kirk O’Callaghan, who joined from Sytner’s CarShop in February 2021, have all departed in recent weeks. However, Companies House still lists Mr Wadell as a ‘person with significant control’ along with fellow co-founder John Bailey.

Mr Waddell is now focusing on his Big Motoring World business. It is claimed he has fallen out with Mr Bailey. Neither wants to put more money in, it is understood.

Mr Waddell will maintain his shareholding in Carzam but will not be involved in running the business. It is understood he invested half the £50m used to start the business at the end of 2020.

Carzam was set up in 2020 to challenge Cazoo and Cinch. In 2021, it sold 13,500 cars, with turnover of nearly £150m. It earlier stated expectations to sell more than 40k cars in 2022, with revenue topping £500m.

https://bit.ly/3MXO0ed

 

More Odey partners depart

Three more partners have departed Odey Asset Management. Massey Roborough, Simon Schafer and Tim Bond all stood down at the end of March. Tim Pearey and Robert Marshall-Lee have also left this year. Odey is a small firm, with an average 29 employees and a further 18 partners as of 5 April 2021.

https://bit.ly/3kRRgfi

 

 

 

WORLD NEWS

US wholesale prices fall again

Wholesale used vehicle prices in the US fell again in April for the third month running. But despite falling 1%, they remain 14% higher than a year ago. The expectation that semiconductor shortages will linger into 2023 means only a moderate decline in prices is forecast during the summer months.

https://bit.ly/3wa0EQx

 

Inchcape buys Caribbean’s oldest retailer

Inchcape has acquired Simpson Motors, the 50-year-old firm that’s the oldest retailer in Barbados. Inchcape has also acquired regional automotive distribution firm ITC, which distributes vehicles across more than 30 Caribbean countries. The acquisitions will add around £120m in annual revenue to the firm.

https://bit.ly/38bd0ju

 

Major retailers’ digital sales success

Group 1 Automotive sold 5,800 vehicles through its AcceleRide online platform in Q1, almost 10% of its total US retail sales. Asbury Automotive sold 5,600 vehicles via its Clicklane tool, and Lithia’s Driveway platform handled 3,100 transactions in March alone. All say conversion rates are up and out-of-market buyers represent the vast majority of sales.

https://bit.ly/39EHoDb

 

 

STOCKWATCH

Closing prices on 6 May 2022 and weekly change

The FTSE fell 1.5% into a weekly loss on Friday over fears of surging inflation and a looming economic slowdown

Auto Trader Group 579.4p (-55.4p / -9.1%)

Caffyns 550.0p (n/c)

Halfords 221.4p (-5.0p / -2.2%)

Inchcape 706.0p (-8.5p / -1.1%)

Lookers 76.7p (-6.8p / -8.4%)

Marshall Motor Holdings 394.0p (n/c)

Motorpoint 245.0p (+3.0p / +1.2%)

Pendragon 23.0p (+0.8p / +3.5%)

Vertu 49.0p (-2.8p / -5.5%)

 

 

COMING UP

Tuesday, SMMT used car sales

Wednesday, Vertu full year

Wednesday, UK retail sales

Thursday, GDP

 

 

 

MONEY MATTERS

Dismal UK economic forecasts

The Bank of England has predicted another recession and half a million job losses in the gloomiest economic forecast for a decade. Real disposable incomes will slump 1.75% this year, the largest annual fall on record apart from 2011. Households will face an average £1,200 blow to their incomes.

https://bit.ly/3MW03J9

 

Bank of England ‘wrong on inflation’

The Bank of England failed to act on inflation fast enough and high inflation will now last years, said its former chief economist Andy Haldane. It was initially thought higher prices would be transitory but the Bank has now been forced into four back-to-back interest rate rises.

Inflation is expected to hit double digits later this year.

https://bit.ly/3FtkPwY

 

 

 

Tags: Bank of England, Carzam, Cazoo, economy, FTSE, Group 1 Automotive, Inchcape, Lithia, Odey, online retail, recession, Smart Fleet Solutions, Vertu