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How leasing killed Carcraft

Image of John Simpson
Author: | Updated: 26 May 2015 17:02

The demise of any business is sad news but especially so in the case of Carcraft.

The Rochdale-based used car chain fell into administration late April, leaving thousands of motorists out of pocket and 500 ‘salt of the earth’ employees out of a job.

It was a long time coming, it had been operating a loss of around £8m a year ‘for a number of years’, and according to receivers Grant Thornton, Carcraft’s fate was the result of ‘poor market reputation, lack of investment, a high cost base, expensive loan note financing and an insolvent balance sheet’.

Carcraft showrooms - taken from youtube

Sales tactics ranged from the deceptive where online prices didn’t reflect those on the forecourt, to the desperate where one salesman offered to drive an undercover BBC investigator from Birmingham to London just to show a car to the supposed customer’s sister.

In all, if not the vast majority of cases, customer wouldn’t be allowed to casually peruse the stock at will. Instead they’d be personally escorted by a salesman in a high pressure attempt to upsell.

It’s not pretty and like much of the 27 Club, it’s perhaps best to forget how they ended up and remember them for what they achieved and in Carcraft’s case, the vehicle leasing industry owes a debt (pun slightly intentional).

Years before the UK truly embraced the ‘pay monthly’ ethos, the used car supermarket played a major part in convincing motorists to pay for their used car every week or month.

The idea was unique at a time when used car buyers would tend to scratch together as much money as they could to splurge on one car, but ironically, it would be this monthly payment pattern that would contribute to the business’ downfall.

The ‘pay monthly’ model was becoming increasingly common. Motorists were paying for everything else every four weeks – insurance, mobile phone contracts, mortgage/rent – so why not their car?

With used car buyers on board with the idea of paying monthly, they soon looked about on sites such as this, and realised that they could get hold of a new car through personal contract hire for about the same price.

And there lies the great irony; Carcraft created the market, but the market was wise and transferred to leasing – a much more appealing overall package.

The numbers speak for themselves: one in ten cars on UK roads are leased, the same can be said for one in six vans and one in four trucks, company car leases are up too and even the Americans are in on it.

So with leasing booming and Carcraft unlikely to leave administration, it’s tough to deny leasing at least played a part in killing Carcraft.

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