Major UK car dealer used by over a million Brits on brink of bankruptcy – with seven sites at risk
CAR dealer Cazoo is teetering on the brink of collapse with thousands of jobs at risk.
The company soared in popularity during the pandemic after Brits were forced to shop for cars online.
Less than a week ago it was revealed that Cazoo had failed to secure any new funding, putting it at risk of falling into administration.
It was launched in 2018 by Alex Chesterman, who also founded property website Zoopla.
In 2021 it was valued at £5bn on the New York Stock Exchange, but that has now dropped to £24million.
The company has less than two weeks to find a buyer or appoint administrators.
In a statement to the Securities and Exchange Commission (SEC) in the US today, Cazoo Group said that notices of intention to appoint administrators had been filed with the High Court.
The notice gives Cazoo breathing space as creditors are likely to be prevented from taking debt enforcement action without legal permission.
In March Cazoo started making drastic changes to stay afloat, including cutting its workforce from 4,500 staff in 2021 to 1,000 staff today.
Cazoo also sold off its remaining stock and switched to an online marketplace model, which allowed other car dealers to list their products.
It also cut business links in Europe.
A spokesperson for Cazoo told The Sun: “This marks the latest step in the planned restructuring of Cazoo which began at the end of last year.
“Our new marketplace model, where consumers can both buy and sell cars, is revenue generating and performing ahead of expectations with interest from almost one hundred car dealers including many household names wishing to trade on the Cazoo platform.
“Cazoo has successfully restructured and significantly reduced the cash burn of the group, resulting in a cash position in excess of £95m at 30th April 2024 compared to £113m at 31st December 2023, and the platform now has approximately 17,000 cars which is more than double the volume we previously supported and demonstrates the scalability of our technology and the strength of the team.
“We are making efforts to secure the next phase of our business and are grateful to our employees for their hard work and commitment.“
How did Cazoo end up here?
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Alex Chesterman had raised more than £30m for his plans to crack the used car market in 2018.
The following year Cazoo signed partnership agreements with BCA and acquired office space, resulting in more funding.
In 2019 the platform officially launched and it was described as “one of the UK’s most exciting new tech businesses” by Car Dealer Magazine.
In 2020 it launched a multi-million-pound advertising campaign and had plans to sell 217,000 cars a year by 2025.
The pandemic was both a blessing and curse for the company as in 2020 the firm was forced to stop deliveries due to social distancing rules.
Despite this, Chesterman signed another multi-million deal with Everton FC to sponsor their kit.
In April 2020 Cazoo restarted deliveries and targeted keyworkers.
In 2021 it was revealed that the company had lost £102million in the first six months of the year, which raised questions over the stability of the company.
Further digging revealed that Cazoo had an additional £102.7million loss for the whole of 2020.
In 2022 Chesterman admitted to investors that his firm “may ever achieve profitability”.
In June that year more cuts were announced after the company lost £243million
In January this year Chesterman stepped down from his position as CEO and staff were braced for mass redundancies.
Cazoo isn’t the only online car retailer to be struggling as CarStore was recently forced to close 16 sites.
Previously owned by Pendragon, CarStore was taken over by US firm Lithia.
In a statement the company, which also manages Evans Halshaw and Stratstone, said the decision was made in order to focus on the other two branch giants.
The news has left 250 employees with the harsh reality that they’re being made redundant.
While 16 stores are shutting up shop, four CarStore sites will be retained and refranchised.
Meanwhile seven CarStore pods will become Evans Halshaw Direct sites.
Lithia bosses said: “The company is preparing to cut roughly 250 roles across the UK.
“The vast majority of the losses will come from closing 16 CarStore sites, including seven warehouse-sized showrooms that were intended to help drive down the cost of selling second-hand models through economies of scale.”
It is understood customers will be contacted about the closures impacting them.
The three car suppliers were previously owned by Pendragon, who agreed to sell up to Lithia in September last year.
In a £250million deal, Pendragon handed over CarStore, Evans Halshaw and Stratstone.