Cinch owner Constellation Automotive Group secures massive funding for expansion

Constellation Automotive Group has raised more than £1bn in private capital that it intends to pump into Cinch, the online used car marketplace.

Constellation, which also owns webuyanycar.com and BCA (formerly known as British Car Auctions), raised the money from numerous investors, including the Abu Dhabi Investment Authority and funds advised by Soros Fund Management.

The company said the cash injection, believed to be one of the largest ever private equity funding rounds, will give it the monetary firepower to expand in Europe.

Cinch only launched in October 2020 but already it is the largest online business-to-consumer marketplace for used cars in the UK, according to Constellation.

“The €400bn European B2C used car market is at the beginning of a massive digital transformation – similar to the one experienced by so many other retail verticals before,” said Thibaut Large, a partner at TDR Capital, which is Constellation’s majority shareholder.

The funding round follows the announcement in March that Cinch’s British rival, Cazoo, would merge with AJAX, a US special purpose acquisition company (SPAC), in a deal that values the combined company at more than US$7bn.

To put that into perspective, London-listed Pendragon PLC () is valued at £261mln.

A quick search of Cazoo’s website indicates the company has 3,140 cars for sale, while Cinch has 3,743; Pendragon’s Evans Halshaw site has 11,601 cars available, which is more than Cazoo and Cinch combined.

Both Cazoo and Cinch have achieved high profiles in a short period through blanket advertising and sponsorship deals; Cazoo sponsors Aston Villa and Everton football clubs while Cinch features on the tear-stained (if not sweat-stained) sleeves of .

Cazoo has been around for a little over a year and claims to have sold more than 20,000 vehicles to date, while Cinch has reportedly shifted 45,000 vehicles since it launched in October; again, to put that into perspective, Pendragon delivered more than 40,000 vehicles in the first quarter of this year, while all of its dealerships were closed because of lockdown restrictions.

The chances are that the company could rename itself Pndrgn, relaunch as an online-only operation and immediately see its stock market valuation quadruple.

The used car business has always had a reputation for being a bit dodgy and there definitely seems something a bit dodgy about the stratospheric valuations of Cinch and Cazoo.