The company that owns Cinch is doubling down on their investment in the online car platform, prioritising it over their other profitable car dealerships. Last year Cinch lost £158,000,0001.
Cinch replicates the business model of Carvana & Cazoo, which look to bring the experience of purchasing a car to the internet. Unfortunately, Carvana & Cazoo aren’t doing very well financially either. Cazoo’s stock is down 98% vs its first day on the stock market, with Carvana achieving similar levels of failure2.
I don’t know much about the car dealership business model. I’m pretty clueless, to be honest, but I know a few things about ecommerce vs lead gen.
Getting someone to commit to spending tens of thousands of pounds just from a product page is very, very difficult.
Getting someone to commit to putting their details into a form to potentially spend tens of thousands of pounds on a product page is achievable. Which is why Autotrader continues to be a successful advertising platform for car dealerships, despite not having ecommerce functionality.
I’m curios what value Cinch thinks it brings compared to the existing car sales formula.
From a consumer perspective, home delivery is already available at independent dealerships which are made easily accessible thanks to Autotrader.
Additionally, Cinch’s product images are too glossy. Every car looks like it just features the generic car manufacturer photo with the numberplate changed in Photoshop, even if that’s not actually the case. It looks fake, which doesn’t help with creating consumer trust, as they may feel uncertain that what’s on the website is what they’ll receive.
Lastly, why would I buy from Cinch when I can buy directly from the vehicle manufacturer, who are more likely to honour any warranty that’s included in the sale. A Polestar 2 from Cinch costs £47,000, & from Polestar directly the same spec vehicle costs £44,000. They’re not giving cars away on Cinch, so why would I risk such a large amount of money on a vehicle I haven’t seen in person.
It seems the future is more likely to be car manufacturers going direct-to-consumer, if there is actually set to be a change in the industry.
- According to Cinch Cars Limited’s balance sheet made up to 3rd of April, 2022.
- Google Finance figures taken from January 6th 2023