An unsure chapter in the exciting story of the post-pandemic used car industry.
We’ve covered the high and lows of the used car market here on the Plan Blog. For a time, online used car companies were the hottest tech stock in town.
Brands like Cazoo, Carzam and Cinch were making the most of a used car gold rush and bringing second-hand car purchasing into the 21st century. Now, the future of online only used car trading model is far less rosey. With Carzam already gone, Cazoo worth 1% of its peak value and redundancies looming at Cinch confidence is shaky at best.
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Cinch announces 6% reduction in workforce
Cinch, the online-only used car dealer, has recently announced a 6% reduction in its workforce. The news comes as no surprise to many, considering the company’s £149 million pre-tax loss for the year ending April 2022. Cinch’s parent company, Constellation Automotive Group, confirmed that consultations regarding redundancies have already begun. These will primarily affect the technology division. Cinch currently has 295 employees, up from 94 at the end of April 2021.
According to reports, the job losses will be focused on engineering and delivery managers in Manchester and other remote locations. The consultations will likely result in a net loss of around 60 jobs. Despite the job cuts, Cinch has created some new roles and vacancies that impacted employees can apply for.
Cazoo announces £704m loss
The car dealership is known for its ‘faff-free’ online car-buying experience, similar to Cazoo, another UK-based online used car dealer that has recently faced financial difficulties. Last week, Cazoo announced a £704 million loss for 2022, including a massive cull of hundreds of jobs.
Constellation Automotive Group confirmed that the redundancies are part of Cinch’s business plan to increase efficiency across its operations. The company’s CEO, Avril Palmer-Baunack, said in a recent interview that Cinch was enjoying ‘record days’ in the first part of this year, surprising her with its strong start.
Will morale in the used car industry recover?
This news of Cinch’s job cuts highlights the challenges faced by online used car dealers in the UK market. Online used car dealers have struggled with the high cost of operations, and companies like Cinch and Cazoo have been investing heavily in infrastructure and marketing.
These recent job cuts will no doubt impact morale within Cinch, and the company’s management will need to ensure that their workforce remains motivated and productive. It will be interesting to see how the market reacts to this news, but it is clear that the online used car dealer industry faces significant challenges. Only time will tell if companies like Cinch and Cazoo can recover their initial momentum.
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