Cazoo says used cars in Europe are a $700bn market
(Picture: PA Archive)An intoxicating fairy dust is in the air. It hovers around the valuations of tech companies, inflating their valuations like enchanted puffballs. Deliveroo: £8 billion, Trustpilot: £1.1 billion. Moonpig: £1.5 billion.
All that capital chasing up the magic of tech is having the opposite effect on some of the older companies with decent assets that make a — clutch those pearls — pre-tax profit.
One such is Pendragon, the car dealership which has been undergoing a steady transformation under new CEO Bill Berman.
The legacy he inherited didn’t look promising: previous management left him a bloated business with too many poorly performing dealerships and unproductive staff.
Under cover of Covid, he’s torn a swathe through it and boosted productivity for good.
But here’s the thing: he also has a business that sells used cars online. The whole process, from choosing, ordering, financing to home delivery can be done sitting at home on your laptop.
It does, in short, the same thing as Cazoo in the UK and Carvana in the US. Cazoo currently has around 3400 cars listed online, while Berman has 16,000.
Yet Pendragon is today valued at £252 million. Cazoo is floating for more than $7 billion and Carvana is currently worth $47.2 billion!
Anything is worth what someone else is willing to pay for it, but there’s clearly a mismatch here.
Berman will soon be launching Pendragon’s online business as a standalone operation with its own brand and a marketing push. Tech investors should get behind him and spread some of their magic.
