Online marketplace carwow is looking to reap the reward of significant investment in not only its comparison platform but also in its consumer-facing Sell My Car brand and in its media services to support manufacturers.
The fact that 2022 was a year of turbulence for the whole automotive industry due to well-documented global factors, is reflected in its latest results, with carwow demonstrating that it certainly was anything but immune from those headwinds, finishing the year as it did with a pretax loss of £29 million.
Even so, carwow is reporting a dramatic year-to-date upturn in revenues and profitability. “We are currently forecasting 2023 revenues to exceed £50 million, a significant step up from £39.9 million last year as we deliver on our mission to be the leading online destination for anyone changing their car,” said carwow chief executive John Veichmanis.
“We also made a number of significant planned investments to broaden our offering with both customers and partners; these include the development of our hugely popular Sell My Car service and extensive investments into our OEM media product,” said Veichmanis, who added that the impact of those decisions has been transformational and had set the business up for a record 2023.
“Dealer numbers on carwow continue to rise and we are seeing a record level of investment by OEMs who are choosing to promote new products via our platform. Group monthly profitability has improved markedly in 2023 and indeed our UK business has already reached break-even. Our cash position remains strong, and we continue to make strategic investments to accelerate the sustainable growth of the business in all our markets.”
What does your latest set of 2022 tell about how Carwow has performed? Our gross revenue for 2022 was £39.6 million so almost £40 million which was up from £3.5 million on 2021. We’re a relatively high growth company so that was more subdued growth which really reflects the supply challenges that everybody saw back in 2022 and certainly towards the end of 2021. We obviously saw historical lows in terms of new car production although the good news is that we did still grow, in part because we really started to ramp up our Sell My Car business.
carwow historically has been a new car comparison. How have you fared with Sell My Car? Two and a half years ago, we started our migration to our new vision: to help people change cars so not only do we help you find your new one, but we also help you sell your old one. The Sell My Car service grew phenomenally in 2022 which ultimately offset some of the decline in the new car area due to the supply challenges.
So this is a good set of results given the broader economic environment. We finished the year with a pretax loss of £29 million and in part that’s really because we’ve spent significantly on several things: building awareness of our new Sell My Car service which is actually now larger than the new car business in the UK. Within two years, it has eclipsed the size of our original business.
Where else have you invested? We have also invested hugely in product to make our Sell My Car service actually scaled to dealers. and we also invested in our new media product. Many of the OEMs now advertise their products on our platform, in part because we’ve got such a data rich platform. We obviously know if a customer is selling a car, we know how much it’s worth, we know which car reviews visitors have read, we know which cars they’ve configured. So we have a very rich media product that allows the OEM to advertise to the audiences that are highly relevant to them.
The good news, although we made a more significant loss than last year, is that in 2023, all of those investments are really paying dividends. Our revenue growth in the UK will be north of 50% this year. We are nicely north of that already and despite the losses last year, the UK has already broken even this year. Quite phenomenal change which is really leveraging a lot of the investments that we made last year and to the end of 2021.
What targets have you set for carwow and Sell My Car? Certainly, for the UK business, we’d like to repeat the success in 2023 and 2024 – targeting north of 50% growth and continuing that path to profitability.
We operate in three countries. the UK, Germany and Spain although in the UK, we actually have all three of our products operating at scale. We want to take many of the things that we’ve done in the UK to our businesses in Germany and Spain.
We provide a brilliant service. It’s a phenomenal place to go to when you want to change car and ultimately, it’s my job to take all those people that are researching online and get them back into dealerships. Get them back onto forecourts. There is a huge level of engagement from our dealer partners and I’m excited about making sure that we can next year fulfil their ambitions to keep growing their businesses as supply returns.