The Carzone Balance Sheet 07-09 RipOff

Car-dealer

Last year carzone would have had around 85,000 adds that were each placed for €19.99 bringing in a gross revenue of €1699150

This year carzone have around 65,000 adds being placed (now granted a lot of these will have been from the old system, that was free until sold, but as they are removed the system turns to adds placed at a cost of €39.99 with a renewal price of €25.99. If you say a car takes on average 3 months to sell, carzone are likely to take in €91.97 on average for each add. Now I know its complicated by the fact dealers pay an annual subscription and account for most of the adds. But lets just say they get €91.97 in general [projecting ahead] for 65,000 adds they would take in a gross profit of €5978050

1 Year Ago: 85,000 adds Gross Profit/Revenue €1699150
1 Year or more on: 65,000 adds Gross Profit/Revenue €5978050

Projected change 20,000 less Profit change €4278900 up

Nice work if you can get it – no wonder carzone couldn’t give a hoot about service and its no wonder Autotrader UK came in and bought the company. Let me say this also, adds on Autotrader in the UK can cost as much as £70 UK (€88 Euro). I wouldn’t be surprised if the price just kept going up year on year. They will test the water this year and next, but even if adds fall well down below 50,000 per year, they still be way up on profits.

All that profit and there is no one to answer the phone when you call them, no one to reply to emails, and as far as I am aware they run the web company that makes the website they use, and pay people for the stupid updates they have recently introduced.

hope I haven’t made any mistakes with the figures, just did some 'basic and simple' calculations - maths has never been my strong point.

Yakuza

Your analysis is a bit simplistic. Firstly, your use of the term "profit" is incorrect, what you should be using is "revenue". You have to take account of costs (hosting costs, hardware costs, staff costs (salaries, pension, PRSI), overheads (electricity, phone) etc etc before you can come up with a profit figure.

mikemac

Car-dealer wrote: »

Last year carzone would have had around 85,000 adds that were each placed for €19.99 bringing in a gross profit of €1699150

I only read the first line and instantly disregarded the rest of your post.
The 1,699,150 isn't profit, it's sales revenue.

They are paying for offices, staff, computers and website hosting. Have loads of other expenses too
I'd imagine they're making a healthy profit but it's a fraction of your total figure.

So not quite the money spinner after all.
Going by your username are you realy a car dealer?

Car-dealer

Gross Revenue - Gross Profit --- Trading Profit - v Net Profit

yes I am realy "on no sorry I am really" a car dealer - I wont bore you with the details and the semantics of 'Grosss Trading Profits' v Net Profits.

Tipsy Mac

I think the way the site is heading it will soon be gone, the new search feature is terrible, the pricing structure i also not competitive especially in the current climate where sales are slow.

smash

can I just point out that 85,000 ads... 90% of these would be dealer cars I'd imagine, so that's not €20 per ad because dealers don't pay per ad!

david

I didn't even bother to read that post after the first line. Theyre not a charity you know. With them joining Autotrader group comes extra exposure for your ad. To be honest I didn't mind paying the 25 quid or whatever it was to advertise my sisters old car, sold in 6 days, after being on CBG/B&S for about a month.

Before you go making "detailed analysis", try and get your facts right. Pure Cash Revenue 65,000 ads wouldn't pay 30 €35k p.a. staff and still provide a decent return for Carzone's investors let alone pay for a whole host of other expenses. I'm sure the private ad fee makes up a very small minority of Carzone's income...

And yeah I agree the new search system is disgraceful, they ruined it

Car-dealer

What is with people and the "I didnt bother to read your post after the first line"

sorry Ive never used bad language before, but go f.k off then! Dont comment on my posting, by stating that you didnt read past the first line!

You try put something informative out there, to spark debate yet some small minded people see it as a chance to shout you down on the basis that you made a minor mistake with something or misdefined something. The thread is a simplistic take on how carzone are likely to make much more profit from the new price structure, yet the service is severely lacking.

Would you have preferred me to show you the company's profit and loss sheet for 2008 -"oh sorry I dont have it to hand!".

Sorry Ive never been angry on here, but some replies really got my back up today. A little tact goes a long way!

maidhc

micmclo wrote: »

They are paying for offices, staff, computers and website hosting. Have loads of other expenses too
I'd imagine they're making a healthy profit but it's a fraction of your total figure.

It shouldn't be a fraction, less that gross revenue, but not a fraction of it.

How many staff do carzone have? I'd wager not many. They are a true ecommerce company, and should have overheads which reflect this.

superjosh9

nice to see that some of the haughty weiners have been watching dragon's den.

Darragh29

Car-dealer wrote: »

Gross Revenue - Gross Profit --- Trading Profit - v Net Profit

yes I am realy "on no sorry I am really" a car dealer - I wont bore you with the details and the semantics of 'Grosss Trading Profits' v Net Profits.

Using fancy terminology isn't going to fool anyone here OP. The financial model you have presented here is not going to support any argument you make, because it is over simplistic and doesn't reflect the reality of the business you are trying to discuss.

galwaytt

Car-dealer wrote: »

...now granted a lot of these will have been from the old system, that was free until sold, but as they are removed the system turns to adds placed at a cost of

...ahah, and you've hit the nail on the head. They did take on a load of 'free until sold ads', and under their new system, they've reneged on this wholesale.

This has been posted on, elsewhere, but I was told I was more or less hallucinating when I quoted that as being the case...........nice to know my 'hallucination' is widespread !!

Car-dealer

Too simplistic - if you want some complicated look up the 'Nash Equilibrium'! Ah, Darragh I remember supporting you somewhat when you were being vigorously attacked on another thread "Et tu, Brute?".

To dear friend, we are not hallucinating, it seems when you raise your head above water we are like ducks to the slaughter.

I am going to leave this thread now by just saying that I do think Carzone are likely to keep increasing prices over the next few years, for all you budding economists out there, its a simple case of monopolistic pricing, or price discrimination, like a train fair that is twice as much at peak hour, the train company know you need to travel, thus up the price, Carzone know that there is no real alternative to their site at present, thus they feel they can up the price and rake in at least 3x profits from 1.6 gross revenue (yes I am saying revenue), to something like 5.5 million gross revenue. No for all those that have criticised me for not deducting costs and liabilities to produce a net profit figure, lets say with the one girl they have working on the phone to answer calls (minus €25k per annum, oh and the web company ....well you get the point, ).

I have awoken in a much better mood today, who shall I dare say will attempt to spoil it?

mikemac

Car-dealer wrote: »

No for all those that have criticised me for not deducting costs and liabilities to produce a net profit figure, lets say with the one girl they have working on the phone to answer calls (minus €25 per annum, oh and the web company ....well you get the point, ).

Nobody is criticising you

I'm guessing you don't mean €25 per annum though

traco

For facts why not just go to the CRO website, pay €2.50 and download a copy of their filed accounts. This would also allow for a good guesstimate of what Autotrader paid fot the business and would answer most other questions.

Aside from all that - fairplay to them they built the company up, marketed it and sold it. I don't like some of their controls and there seems to be issues with them but its an open market and no-one is forced to use it. I think their big coup was getting all the dealer business. Regular income and then private sellers become the icing on the cake.

corkandproud

traco wrote: »

For facts why not just go to the CRO website, pay €2.50 and download a copy of their filed accounts. This would also allow for a good guesstimate of what Autotrader paid fot the business and would answer most other questions.

Aside from all that - fairplay to them they built the company up, marketed it and sold it. I don't like some of their controls and there seems to be issues with them but its an open market and no-one is forced to use it. I think their big coup was getting all the dealer business. Regular income and then private sellers become the icing on the cake.

Most sensible post of the day award!

traco

Thanks - wearing my pratical hat at the moment

MarkN

Does it matter how much they make? Or might make?

THE MAIN THING IS, THE SITE HAS GONE TO THE DOGS.

The search for cars is a disgrace! As a paying customer, how the f**k am I meant to sell my car when the initial search for BMW 3 Series throws up 4,000 cars?

What was SO HARD about just having a search for BMW 318 for example like the old way?

So you refine your search, you don't like the BMW 318 you've clicked on, so you click back and............... it goes back to 4,000 BMWs again.

I'd LOVE an Irish company to come and take them on, the problem is, practically EVERYONE uses Carzone.

It is so completely un-user friendly I don't know how a potential car buyer is meant to find a specific car on there anymore. :mad:

Darragh29

Car-dealer wrote: »

Too simplistic - if you want some complicated look up the 'Nash Equilibrium'! Ah, Darragh I remember supporting you somewhat when you were being vigorously attacked on another thread "Et tu, Brute?".

To dear friend, we are not hallucinating, it seems when you raise your head above water we are like ducks to the slaughter.

I am going to leave this thread now by just saying that I do think Carzone are likely to keep increasing prices over the next few years, for all you budding economists out there, its a simple case of monopolistic pricing, or price discrimination, like a train fair that is twice as much at peak hour, the train company know you need to travel, thus up the price, Carzone know that there is no real alternative to their site at present, thus they feel they can up the price and rake in at least 3x profits from 1.6 gross revenue (yes I am saying revenue), to something like 5.5 million gross revenue. No for all those that have criticised me for not deducting costs and liabilities to produce a net profit figure, lets say with the one girl they have working on the phone to answer calls (minus €25k per annum, oh and the web company ....well you get the point, ).

I have awoken in a much better mood today, who shall I dare say will attempt to spoil it?

OP, I'm not attacking you are you seem to suspect...

Just get a reasonably realistic figure for revenue/turnover and operating costs for the business. It isn't as simple as just multiplying an arbitrary number of ads, by the retail cost of the ad. You haven't taken VAT out of the retail figure, and you haven't taken account of the fact that trade ads make up a majority of the ads and obviously this fact in itself significantly disturbs the model you have presented here.

No need to walk off with the ball and end the discussion, just revisit the figures you presented. As another poster said, you can get a lot of data from the CRO for 2.50 Euro... I'll be in the CRO office this week filing my own accounts and will pull a copy of the accounts for this company and we'll take it from there...

cantdecide

traco wrote: »

This would also allow for a good guesstimate of what Autotrader paid fot the business

I believe it's usually the previous years' net profit times four or something to that effect...

Don't beat up on carzone- they've given hours and hours of endless pleasure. Op, if you have a gripe with their ricing, you're quite welcome to take appropriate action...

Bandara

Why do people who have no idea of what they are talking about post up things like this?

The OP has not got a single validated idea or concept of the money that Carzone spent on producing their site and keeping it running, therefore he has no idea of how much they need to make back to keep the bank happy and to make themselves a healthy profit.

So adding up some estimated numbers in your head, stating them as essentially facts and then slaughtering the company for "ripping people off" is embarrassing. Either way the profits of the company are no ones concern, if your not happy with their price don't pay it, if your not happy with their service don't use it.

If you do think they are making such massive profits then I suggest you get yourself into that business asap, sure it must be a doddle, all you need is a PC and phone line and your on the pigs back.

Its kind of the same as my local car dealer, he has 200 cars, I think he's making 5000 quid on each car so he's going to make €1,000,000 profit when he sells them. What a robber.

:rolleyes:

peasant

Darragh29 wrote: »

As another poster said, you can get a lot of data from the CRO for 2.50 Euro... I'll be in the CRO office this week filing my own accounts and will pull a copy of the accounts for this company and we'll take it from there...

No we won't.

This forum is about motoring and not balance sheets.

If you don't like carzones' service, don't give them your money ...simple as that.

No need for business analysis or balance sheet interpretation ...especially not by amateurs on a public forum.