Cazoo’s spectacular fall from grace is almost complete as reports suggest it will collapse into administration today.
The UK-founded firm, which listed in New York in 2021 and was once valued at more than £5 billion, is expected to appoint Teneo as administrators a week after it filed to seek temporary protection from creditors.
On Monday its wholesale arm was sold to G3, while Constellation Automotive – owner of rival Cinch – has acquired a number of its assets.
More than 700 people have already lost their jobs at Cazoo, which originally offered end-to-end used car sales – including refurbishment – entirely online. The firm saw incredible growth due to the COVID-19 pandemic but, having quickly launched into several international markets, it suffered big losses when consumers returned to car showrooms.
Earlier this year it announced its intention to pivot to a pure marketplace for used car sales, in the style of Auto Trader. Administrators are expected to retain a number of staff to operate this while a sale is explored.
CEO Paul Whitehead, who held the position of COO at inception in 2019, stepped down recently while founder Alex Chesterman – co-founder of LoveFilm and Zoopla – left the business in December 2023 as it restructured its debt pile.
Chesterman was succeeded as CEO by Whitehead in April last year following a turbulent few months which saw its share price nosedive, the disposal of its Italian and Spanish businesses and its French and German operations wound down.
By March 2024 it had sold close to 160,000 retail cars in five years but said it would wind down its inventory through retail and wholesale channels.
“Transitioning Cazoo to a pure-play automotive marketplace business model leverages our key advantages: the nationally recognised and trusted Cazoo brand and the Cazoo eCommerce technology platform,” Whitehead said at the time.
“We have built a data-driven business for buying and selling cars… our transition means we can now offer the UK’s 13,000 car dealers the chance to put their forecourt stock in front of the one million potential customers on average who visit the Cazoo website every month.”
David Kendrick, partner at national accountancy group UHY Hacker Young, reflected: “Cazoo had been teetering on the brink for some time now and it was only a matter of time before cash ran out.
“The model was flawed from day one and it was far too late before they got enough senior expertise from the car dealership industry.
“Although they had management expertise from other areas of eCommerce, they started without enough genuine understanding of how the car market and car dealers work. That meant they underestimated the wants of the consumer, the challenges around national delivery and the strength of the local car dealer market.
“They left it too late before they started to trying to adjust their model.
“All of these factors have contributed to Cazoo’s downfall and billions of pounds of investor money burnt. A sad story and one that has simply created a brand name and not much else.”