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Lookers boss backs ‘hybrid’ car sales model as Cazoo and Cinch disrupt market

·2-min read
<p>Car dealerships have seen a boom in demand since the pandemic hit and people continue to avoid public transport in large numbers</p> (Getty )

Car dealerships have seen a boom in demand since the pandemic hit and people continue to avoid public transport in large numbers

(Getty )

Lookers CEO Mark Raban has cheered the established car dealership's' "hybrid" model, as it faces a market disrupted by the likes of Cazoo and Cinch.

Tech entrepreneur Alex Chesterman's Cazoo was only founded last year but is now the UK's biggest online-only secondhand car dealer. Bankers estimate it is worth £5 billion.

Lookers, which has a market cap of around £244 million, saw both new retail and used car sales up by around 32% in the four months to May despite its showrooms being closed for almost the entire period, which Raban said "gave really good confidence about our new online capabilities".

The CEO said that the group has seen consumers flock back to dealerships since they reopened in April, and argues traditional firms will continue to have an advantage over online rivals when it comes to sourcing secondhand cars at volume.

He told the Standard: "If we sell a new car, we also get a part-exchange. That positions us in a strong place compared to some of the challenges the new entrants are facing in terms of sourcing used cars in the right numbers.

"The new car and used car automotive market in the UK is massive. When you look at their [disruptors'] business plans they're not predicated on taking a massive market share, so I think there is room. Our view is that an omni-channel experience - where customers can move online or instore - or a hybrid in-between, is the winning model."

He added: "We look forward to seeing how the disruptors do. It's good to have interest in our sector, and they're helping us drive change and think things through."

Lookers has updated its online offering since the pandemic hit, including home delivery, online financing applications and the chance to scan a QR code and make a deposit on forecourts outside opening hours.

Analysts at Numis said that “the extent of market outperformance looks to add further evidence of much improved execution at Lookers with digital initiatives resonating well".

Last year the firm was hit by an accounting scandal that saw the accounts delayed and shares suspended at 21p.

The Financial Conduct Authority launched a full investigation after the group identified potentially fraudulent transactions.

The company said today that it has renewed its bank facility and that audit procedures for its 2020 results are "progressing as planned" with new auditors BDO. It will release full year results for the year to January 2021 later next month.

Share dealings resumed at 39p in January, and were up 7%, or 4.5p, to 68.5p, on Tuesday morning.

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