A HUGE car dealership with over 91,000 vehicles currently on sale will close within weeks putting over 100 jobs at risk.
The German online used car marketplace has made heavy losses since opening in the UK in 2019 when it looked to rival Auto Trader and Motors.
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Heycar’s majority shareholder, Volkswagen Financial Services (VWFS), have pulled the plug leaving more than 126 employees across the UK, Germany, and France at risk of losing their jobs.
A large proportion of Heycar’s employees are based in the UK.
They are expected to close in the UK shortly after their closure in Germany, expected to be in mid-May.
A VWFS spokesperson confirmed that they “expect we will have to let go of a large portion of Heycar’s employees”.
However, VWFS did confirm its plans to launch a “new subsidiary” which they hoped would “integrate the technology developed by Heycar’ into its wider business”.
They also said they were “considering whether some of the UK employees could be taken on by VWFS UK to further expand the user car business in the B2B sector”.
Volkswagen Financial Services (VWFS) was originally the company’s largest shareholder at 78 per cent followed by Volkswagen at 13 per cent and Renault at 9 per cent.
According to its most recent accounts, Heycar made a loss of £30m in 2022 followed by a £22.4m loss in 2023.
Its latest annual report also revealed a decrease of £7.4m in revenue for the firm.
According to Car Dealer Magazine, some reports have indicated VWFS have invested more than £250m in Heycar since its launch.
Heycar currently has over 91,000 cars up for sale on its website while market leader Auto Trader has 459,000 and Motors/Cazoo has 234,000.
On the firm’s website, it describes itself as ‘the place to buy your next car the feel good way’ and has been described by a VWFS spokesperson as a ‘pioneer in the online used car marketplace’.
It offered an alternative experience to customers by focusing on younger used cars in an attempt to shake up the used car advertising marketplace.
Former CEO, Matt Moakes, previously said of Heycar: “Other online listings businesses are just digital version of newspaper ads.
“That’s not Heycar.”
He added: “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.”
Both Heycar and VWFS have been contacted for comment.
The news of Heycar’s closure comes as many car dealerships continue to go out of business.
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.
In February, BCA revealed the closure of its Banbury branch in Oxfordshire as hundreds lost their jobs.
Last month, it was reported that a major Volkswagen dealership in Bromborough, Wirral closed down after the US firm which owned the branch, announced major cutbacks.
A family run car dealership in Cambridgeshire, TC Harrison, is also set to close in the coming weeks to make way for a retirement village.
