Online Used Car Reseller Autoquake In Administration
Thursday, 17. March 2011
Online used car reseller Autoquake have officially gone into administration. A call to their offices confirmed that MCR have been appointed as administrators following the collapse of the company. I believe that somewhere in the region of 150 jobs could be lost unless a buyer can be found although it was clearly a model that could never work. They appointed highly paid executives in roles that were far too small for their ability. As I have worked with Carsite, the originator of the online used car reselling business, I know the type of approach that will make this type of company work. Some get it right and others get it very wrong, the mystery is how investors could be hoodwinked into investing £19 million into a clearly flawed model. Sad days for the staff of Autoquake but a big boost to Carsite. By Graham Hill
EX- Autoquake staff member Says:
I have to agree partly with you comments Graham. However, the model itself was sound and a viable business if run properly.
The highly paid execs definitely were the problem.
Whatever abilities they did possess from their previous roles at Expedia did not translate beyond a half decent website, and they treated the whole operation as if they were churning out tins of beans on a production line. They were completely ignorant to suggestions of how to improve the company from their staff and usually blatantly ignored their workforce or ‘removed’ them for not being their puppets. They regularly overlooked ways to save money and were reluctant to spend any on essential improvements.
It is indeed a sad day for the truly great teams that worked there and I can only hope that someone with a little more savvy comes along and buys into it and shows them how it should have been run – with common sense and not like a game of Monopoly.
Johnny Focus Says:
Quite right, this business model was doomed from the outset.
Autoquake made extravagant promises to ordinary people – never a good idea – and failed to deliver with the low-end stock they managed to scrape together from the leasing chain. Strangely for a web business, they made their buying process convoluted and expensive, and totally failed to engage their real base of potential consumers on the Internet.
All in all, the Autoquake episode will probably be used in future as a case study in how NOT to operate ecommerce – whether cars or otherwise. I agree it is odd that such a talented management team could come so horribly unstuck – but then, as you say Graham, they were too grand for the job and didn’t focus on consumer basics.
Says:
Hi Jonny, great response, many thanks for that. They are of course spot on, the idea in any business is not to over promise but to over deliver, something I’ve done for years as a lease broker providing finance on vehicles. In fact the business model was quite sound, I have been a consultant for Carsite, which actually launched in 1997 under the name of Auto-Online. It was sold then bought back by the founders who have been building the business ever since, I am back there as a consultant at the moment and you can expect to see a big announcement very soon.
The problem with Autoquake was partly the arrogance of its Chief Exec but partly the size that they grew to in terms of their cost base compare to their turnover of just 1,000 cars per month. You need people running the company with the ‘common touch’ who can relate to the public and those wishing to but the used cars from their website. Industry leaders employed over the years must have cost a fortune. Having said all that it’s always sad to see a company collapse because it costs jobs.
It’s a shame and I wish the staff well but sit here pondering the situation and asking myself what the investors were doing whilst the company managed to spend £19 million in such a short space of time? They had a member of their team on the board, surely they saw the warning signals? Very strange. Watch out for Carsite!
Says:
Thank you so much for your response. You are right, as I responded to Jonny, the model isn’t as flawed as the people running the show. Understanding your customer is all important and not just understanding but empathising with him. I have sent many people to Autoquake over the years if Carsite hasn’t had a suitable car and the feedback has usually been complimentary about the staff if not always about the car. As a consultant in this industry it was clear that they employed far too many staff for the number of cars turned over per annum, they had executives that didn’t understand the product or the demographics of the customers and were overpaid for the position in such a small business and they spent far too much time trying to win awards for their website. I will be launching two new businesses this year which will be, as this blog is, very customer focused – watch this space. It’s always bad news to hear that people are made redundant through no fault of their own. I wish you all the best in your search for a new job if you haven’t got one already, thanks again for the contribution. G