A HUGE used car dealership, with 91,000 motors for sale, is set to close within weeks, after suffering heavy losses.
Heycar, has been operating in the UK since 2019, and hoped to become a competitor to Auto Trader and Motors.
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However, the German online marketplace made a £22.4 million loss in 2023 and a £30 million loss in 2022, with the company’s annual report revealing that revenue for the firm has decreased to just £7.4 million.
Majority shareholders, Volkswagen Financial Services (VWFS) have now pulled the plug on the business, meaning that Heycar could close as soon as next month.
This could lead to potential job losses in the UK, Germany and France.
“Heycar has been a pioneer in the online used car marketplace and, despite the decision to wind down their operations, the valuable insights and digital solutions developed so far will play a crucial role in the future of VWFS UK, as we continue to explore new ways to drive growth and innovation in the automotive e-commerce space,” a VWFS spokesperson told car dealer.
VWFS added that it plans to launch a “new subsidiary” that will “integrate the technology developed by Heycar”.
“The shareholders have decided not to provide Heycar with any further funding,” a VWFS spokesperson previously said.
“We expect that we will have to let go of a large portion of Heycar’s employees.
“However, we are considering whether some of the UK employees could be taken on by VWFS UK to further expand the used car business in the B2B sector.”
Heycar currently employs 126 people, a large proportion of which are based in the UK.
Operations in Germany are set to cease in mid-May, with the UK to follow shortly after.
In France, the closure may be slightly slower, due to employee laws.
VWFS told a German website that it had “underestimated” the marketing costs needed to launch the site, and “misjudged the development.”
Heycar, which currently has 91,000 cars for sale on its website, aimed to stand out from other used car sites by focusing on younger used cars, and providing more backing for buyers.
Why are so many car dealerships closing down?
By Summer Raemason
According to Business Rescue Expert there are multiple reasons why car dealerships are folding across the UK.
The first major factor is rising online car sales which are beating in-person sales at dealerships.
With an extensive range of comparison and second-hand sites to chose from, may car buyers don’t even step foot into a dealership anymore.
Secondly, the actual cost to physically run the sites has soared.
Rent, wages and energy bills have all been increasing for roughly the past five years, putting many out of pocket.
Car manufacturing across the globe was also hit by a semiconductor chip shortage in 2022 which made it difficult to produce new motors.
The high demand with limited supply created a backlog, which although has eased, is still having an impact on the industry.
A third reason for recent closures is the shift to electric cars.
They are becoming more popular, given the Government initiative to be Net Zero in 2050.
The industry is also affected when companies merge or are bought by rivals.
This may lead to some independent names falling victim to the ongoing spate of closures.
Former CEO Matt Moakes previously said: “Other online listings businesses are just digital versions of newspaper ads. That’s not Heycar.
“We have features and products that improve the experience whether you’re a dealer or a consumer, the latest of which includes our worry-free money back guarantee, and our new Concierge service which helps car buyers take the stress and inconvenience out of car ownership.”
This follows the news that the Volkswagen dealership on Pool Lane in Bromborough, Wirral has closed down, after US firm Group one, which owns the branch, announced major cutbacks.
A Volkswagen spokesperson told the Globe: “We can confirm that Group 1 Volkswagen Wirral ceased trading at the end of March and is now closed.
“Our focus when any network changes take place remains on convenience and the highest levels of service.
Family run car dealership TC Harrison, is also set to close its branch in St Neots, Cambridgeshire, in the coming weeks, to make way for a retirement village.
The dealership building will be demolished, with all staff and business activities set to be relocated to the Huntingdon branch.
