CAR dealer Cazoo is teetering on the edge of the abyss and thousands of jobs are at risk.
The company soared in popularity during the pandemic after Brits were forced to buy cars online.
This was announced less than a week ago Cazoo had been unable to secure new funding, leaving it at risk of falling into administration.
It was launched in 2018 by Alex Chesterman, who was also the founder real estate website Zoopla.
In 2021 it was valued at £5 billion on the New York Stock Exchange, but that has now fallen to £24 million.
The company has less than two weeks to find a buyer or appoint administrators.
In a statement to the US Securities and Exchange Commission (SEC) today, Cazoo Group said notices of intent to appoint administrators have been filed with the Supreme Court.
The notice gives Cazoo breathing space, as creditors will likely be prevented from taking debt enforcement measures without legal permission.
In March, Cazoo began making drastic changes to stay afloat, including reducing its workforce from 4,500 employees in 2021 to 1,000 employees today.
Cazoo also sold its remaining inventory and switched to an online marketplace model, allowing other car dealers to offer their products.
It also severed business ties in Europe.
A spokesperson for Cazoo told The Sun: “This marks the final 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 generating revenue and performing beyond expectations, with interest from nearly a hundred car dealers, including many household names looking to trade on the Cazoo platform.
“Cazoo has successfully restructured and significantly reduced the group's cash burn, resulting in a cash position of more than £95 million at April 30, 2024, compared to £113 million at December 31, 2023. The platform now has approximately 17,000 vehicles , which more than doubles the volume we previously supported and demonstrates the scalability of our technology and the power 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 dedication.”
How did Cazoo get here?
Cazoo became one of the best-known British car brands, sponsoring snooker and darts tours… what went wrong?
Alex Chesterman raised more than £30 million 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 financing.
In 2019, the platform was officially launched and was described by Car Dealer Magazine as “one of the UK's most exciting new technology companies”.
In 2020 it launched a multi-million pound advertising campaign and had plans to sell 217,000 cars a year by 2025.
The pandemic has been both a blessing and a curse for the company, as the company was forced to halt deliveries in 2020 due to social distancing rules.
Despite this, Chesterman signed another multi-million deal with Everton FC to sponsor their kit.
In April 2020, Cazoo resumed deliveries and targeted key workers.
In 2021, it was revealed that the company had lost £102 million in the first six months of the year, raising questions about the stability of the company.
Further research revealed that Cazoo made a further £102.7m loss for the whole of 2020.
In 2022, Chesterman admitted to investors that his company “could one day become profitable.”
More cuts were announced in June that year after the company lost £243 million
In January this year, Chesterman resigned from his position as CEO and the staff was prepared for mass layoffs.
Cazoo isn't the only online car retailer to struggle, as CarStore was recently forced to close sixteen locations.
CarStore was previously owned by Pendragon and was acquired by The American company Lithia.
In a statement, the company, which also manages Evans Halshaw and Stratstone, said the decision was made to focus on the other two industry giants.
The news has left 250 employees with the harsh reality that they will be laid off.
While 16 stores will close their doors, four CarStore locations will be retained and re-franchised.
Meanwhile, seven CarStore pods will become Evans Halshaw Direct sites.
Lithia bosses said: “The company is preparing to cut around 250 roles across the UK.
“The vast majority of losses will stem from the closure of 16 CarStore locations, including seven warehouse-sized showrooms designed to help reduce the cost of selling pre-owned models through economies of scale.”
It is understood that customers will be contacted about the closures that affect them.
The three car suppliers were previously owned by Pendragon, which agreed to sell the car to Lithia in September last year.
In a £250 million deal, Pendragon transferred CarStore, Evans Halshaw and Stratstone.
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