Startup scale? It’s all about perspective

  11 April 2021

Finally, after almost 100 days, the showroom shutdown ends tomorrow (Monday, 12 April) and retailers can restart selling cars in person.

Except that during the past three months, perhaps more than either of the previous two lockdowns, traditional franchised retailers and their manufacturer partners have shown themselves to be incredibly adept at selling new and used cars online.

While the headline figure for the all-critical March new car registration figure was up, no one would really call it ‘back to normal’. Retail sales for the month were off by 4.1% on 2020 and the total first quarter figures were down 12% on what was a depressed Q1 2020.

However, that still means well over 425,000 new cars were sold online; an impressive feat that few predicted was even possible a year ago. But then, the resilience and adaptability of franchised retailers has always shone through, and perhaps we shouldn’t be so surprised at all.

It’s this repeatedly-proven ability to offer customers what they want, when they want it, that means challenges from new online-only businesses will be less of a threat than those companies predict.

After all, if Lookers, which has been dealing with more than its fair share of non-Covid issues, can sell more than 44,000 cars in the latest lockdown, plus issue a trading statement showing it’s ahead of analyst profit expectations, then other dealer groups must be doing well too.

It was Lookers’ statement that got me thinking about scale and, coupled to a chat in the Auto Retail Network (virtual) office (a WhatsApp group to you and me), how national newspaper coverage can give the impression new-start online-only operations are bigger than they really are.

The example we picked to illustrate the real scale of traditional franchised retailers versus Cazoo, for no other reason than one of our number owns one and they’re generally popular, was a used Volkswagen Polo.

VW Polo online listings

The chart says a lot, but the one thing to remember is that all these cars are available to buy online today whether they’re from Arnold Clark or Cazoo.

I’m sure both the ‘pure online’ and the traditional retailers will learn from each other, but I’m not convinced there’s such gulf between the two that merits the high valuations of one against the somewhat lower valuations of the other.

Tristan Young

Editorial Director

Auto Retail Network

imageTags: Cazoo, Lookers

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