Cazoo, Cinch, Motorpoint & UK Used Car Market

Former Director at CarNext, LeasePlan & Former COO at Carwow

Why is this interview interesting?

  • How auto lessors are trying to enter online B2C
  • How lessors sell vehicles to dealers
  • Positioning of Cinch, Cazoo and Motorpoint
  • How Motorpoint can compete against online threats
  • The role of Autotrader in the UK
  • How Auto Trader needs to evolve

Executive Bio

Andrew Hooks

Former Director at CarNext, LeasePlan & Former COO at Carwow

Andrew has over 12 years experience in digital automotive from all different angles; online classifieds, used cars, new cars, and aftermarket parts and accessories. He was most recently in charge of launching CarNext, Leaseplan’s wholesale and B2C remarketing division, which competes with Cazoo, Cinch, and other used car supermarkets. Andrew is also the Former COO at Carwow, the UK’s new car aggregator, and he spent over 7 years running eBay’s motor business in the UK. Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Andrew, can you provide a short introduction to your background in the automotive space?

I’ve spent the best part of the last 12 years in the world of digital automotive, taking the sector on from a number of different angles, such as used cars, new cars, parts and accessories in the aftermarket, from the perspective of both marketplaces that I have been involved in but also as an operator of a used car online retailer.

Can we just start with your most recent role? Could you lay out what you were doing at CarNext?

Most recently, I was managing director of CarNext, here in the UK. CarNext is the remarketing division of LeasePlan. We were building a business which enabled not only wholesale buyers to source LeasePlan inventory but also to sell those cars directly to consumers across the UK.

Can we take a step back and really look at the options that lessors or leasing companies have with their inventory? If I’m a consumer and I’ve got a lease car, what happens when the car goes back to the leasing company? What options do they have?

The exact approach varies from company to company but, ultimately, if you go back in time, it used to be the case that remarketing was solely prioritized with getting vehicles off the balance sheet of the lease company as quickly as possible. They wanted to free up the capital that was tied up in the cars that had run their course with their leasing customers, and reinvest that capital into more new cars, to attract more new lease customers.

To some extent, that is still the case. But the industry has become significantly more complicated and sophisticated over the years. As you’ve seen, in the market, some lease companies have started to look at selling cars directly to consumers themselves and all sorts of other innovations. Fundamentally, most of the lease companies, historically, have used auctions – the big three in the UK being BCA, Manheim and Aston Barclay – to wholesale their vehicles to retailers who will, ultimately, then find consumers to buy those cars.

Why don’t they sell direct to dealers, as well?

Some do sell directly to dealers. It depends on the individual lease company’s concerns as to how they wish to do it. Some do deals directly with retailers, either in bulk or on a smaller case by case basis. If they do that, it helps the retailer in that they don’t need to go through the auctions and they don’t incur additional costs. It helps the lease company if they have those sort of deals – particularly in bulk – as it’s a guaranteed disposal route, each month.

Doesn’t it make sense for both parties? As you said, the leasing company would probably get a higher price because there are less mouths to feed, in a way, if you go through the likes of BCA, and the dealer can then capture more margin. Is there not an incentive for the leasing company to actually push more towards dealers, rather than through the auctions?

Unfortunately, it’s not quite as simple as that, as these things rarely are. There are lots of other considerations that need to be taken into account but, beyond that, if you’re just looking at the economics of a single deal, you want to be sure that you are achieving a fair market price for the inventory that you are selling. It’s pretty difficult to ascertain exactly what that fair market price is, without going through some kind of open market retail process. It’s not necessarily a given, but selling a vehicle direct to a retailer, from a lessors perspective, means that they get more for the vehicle than they otherwise would have done.

From the retailer’s point of view, it can sometimes be beneficial because they can circumvent some of the fees and some of the other costs that they would incur further down the line. Again, it depends on the nature of the deal and how they’re structured, as to whether it actually returns a market value or not.

It really comes back to just having the market define the fair price for that inventory and the leasing company shifting it as fast as possible, off the balance sheet?

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Cazoo, Cinch, Motorpoint & UK Used Car Market (June 2, 2021)

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