Will Cazoo Disrupt the New Car Market?

Cazoo's acquisitions of Drover and Cluno pulled together a number of themes critical to their investment premise. Sure it provides Cazoo with a gateway to Europe, but their subsequent investment in brand-new subscription fleet portends further disruption of the new car market

A peak at their website, reveals available stock of nearly 600 21-reg vehicles (of course, this is but a fraction of the fleet already out on contract). Ford, Vauxhall, Mercedes and others signal a clear willingness to side-step franchised dealers in making brand-new cars available to consumers through subscription via Cazoo.

Ok, so far, this is nothing new. Leasecos and brokers have operated outside of the franchise paradigm for years and of course we're on the precipice of throwing out franchises altogether in favour of an omni-channel agency-based model. But, this Cazoo thing might just be a bit different.

Price Advantage - A comparison of their pricing with market quotes for 24-month contract hire (all adjusted for insurance and maintenance) suggests a highly compelling product from Cazoo.

In effect, Cazoo is a large commercial fleet customer with access to the premium pricing typically available only to the daily rental sector. Cazoo's deal is probably even better than daily rental as they'd forgo a buyback provision putting the benefit into the new car price.

Manufacturers seem to be buying into the Cazoo "culture" (at least on a test basis). What would a successful Cazoo subscription program mean for manufacturers' omni-channel marketing plans? How large and element of new car marketing will subscription become? To what extent will Cazoo impact the emerging relationships that manufacturers will forge with their formerly franchised dealers?

To validate their investment premise, Cazoo must continue to show influence over all aspects of retail automotive. Because subscription may be an effective lever into new car sales, leasecos and soon to be "formerly franchised dealers" are on notice.

Grace brings clarity to a chaotic retail automotive sector helping business leaders take better-informed and more impactful decisions.