ICSM Business – Retail Insolvency News: concerns mount over second online car dealer giant as losses mount

By Harry Mottram: A new way to buy used cars that became popular during the lockdowns when it was not possible to visit car lots has seen a negative change in its fortunes. Cinch sells cars purely online with their fleet of trucks delivering the vehicles direct to the buyers’ homes. Now like their arch rival Cazoo with a similar sales model they are apparently in trouble financially after seeing a losses increase by 42% in 2023.

Writing in Car Dealer Magazine reporter James Baggott noted: “Online used car dealer Cinch – which aims to make selling vehicles ‘faff free’ – lost £181.2m last year. In accounts just filed for Cinch Cars Limited with Companies House, the firm revealed its losses had risen 42% for the year ending April 2023, up from £126.8m the year before. Cinch said the losses were made as it ‘continued to invest in marketing, innovation, systems and personnel’ and that it was aiming for ‘long term growth’. Revenue at the business grew 24% topping £1bn, up from £815.7m the year before.”

For the public who are considering buying a used car from one of these firms there’s a concern that if they go bust (as Cazoo has hinted) they could lose their cash. Sole traders, the self-employed, freelancers and small businesses that by used cars instead of leasing new cars could also be left high and dry.

Ian Carrotte of ICSM - the business membership group dedicated to fighting bad debts and late payers with many members involved in the retail and motor industries – said: “Those buying a care later this year from these online used car sellers and suppliers given purchase orders from them need to be cautious. Companies don’t announce in advance they will go bust giving customers and suppliers to take action – but the publication of turnover and losses give a good idea of what may happen.”

He pointed out that at the end of April 2023 it had net assets of £120.6m, compared to net liabilities of £158.9m at the same point the year before. ICSM’s CEO said: “It doesn’t take much mathematics to work out there is a problem there. If you plan to trade with these firms then make sure you stick to your credit terms and ideally get money paid up front – just as a retailer would expect you to pay up front.”

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