7:22 am, March 16, 2026
When Alex Chesterman decided to set up the doomed car dealer Cazoo, he looked across the pond to America for inspiration – and it was Carvana that caught his eye.
With its marketing gimmick vending machines and online deals, investors were convinced this was the next generation of car sales.
Chesterman was hooked. He copied Carvana’s concept – just without those iconic towers – and launched Cazoo in the UK in 2019.
Just like Carvana, investors piled in and when it eventually listed on the New York Stock Exchange, it was worth more than £6.5bn.
But, after a troubled five year run, it collapsed into administration after its share price plummeted 98%. Even today, it owes creditors – including many retail customers – more than £75.8m.
If you thought Cazoo’s rise was dramatic, State side Carvana’s ascent was even more meteoric. And interestingly the two were writing similar troubled stories.
Carvana launched in 2012 with a simple pitch: buy a car online, finance it online and have it delivered to your home or from one of their giant vending machines.
The latter are nothing more than huge billboards for the company – storing around 30 cars for customers before they pick them up. Strategically placed across the States next to busy ‘freeways’, they act as advertising for the brand.
Carvana pioneered a seven-day returns policy for used cars, so if customers didn’t like what turned up on their drive they could simply send it back. This was designed to give them confidence in this new way of online shopping and in a lot of respects, it worked.
The US car market is dominated by big dealers with huge inventories. Customers over there buy in a very different way to the UK. They visit a car dealership and can browse hundreds of new and used cars all in one place. So the idea of shopping online for a vehicle was very different.
But during Covid, it really took off. Closed forecourts played into the hands of the likes of Carvana, just as it did here with Cazoo, as they both had the set-ups ready to sell online.
Off the back of this success, Carvana loaded itself up on debt and splashed out on the US auction house Adesa in a multi billion dollar deal. It gave the firm access to even more used cars and a new revenue stream.
However, while Covid came as a blessing, it was also a curse, as lockdowns forced other car dealers to offer the same online sales service, diluting their originality.
When showrooms were allowed to reopen, dealers across the world welcomed back customers and were still able to offer them the option to buy online or, importantly, visit a dealership if they wanted to. Against this backdrop, Carvana and Cazoo’s model looked rather one-dimensional.
What followed Covid was a boom time period for used cars. Prices rose across the world as stock shortages increased and this hot used car market was fuelling Carvana. It was being built on cheap money in a feel-good market.
Then, in 2022, things changed. Used car prices started to fall and interest rates rose. Suddenly Carvana was in trouble. Its share price collapsed over fears it would struggle to repay its debts – wiping billions of dollars off its value. Newspaper pundits were openly questioning whether it could survive.
US automotive journalist Cliff Banks said: ‘Carvana really was racing against the clock on potential bankruptcy.
‘They had these debt payments facing them, huge debt payments that were coming up and they did not have the cash or the means to pay for them.’
While Carvana had caught a cold, in the UK Cazoo had the flu. It was facing similar issues and had burnt through tens of millions of pounds on an outrageous marketing campaign that had seen it sponsor a glut of sports teams.
Cazoo’s problems were terminal, and eventually led to its death, but Carvana managed to claw its way through the crisis.
The firm slashed costs, cut thousands of jobs and rowed back on expensive marketing campaigns. And amongst this, it stopped chasing growth and focused on improving its gross profit per unit. Its share price bumped along the bottom, but since 2024 has started to rise again.
Today, it’s worth more than its pre-Covid highs with a market cap of more than $73bn (£58bn). Last year, the firm sold nearly 600,000 used cars and saw its revenues rise 49% to more than $20bn. It’s even started to buy franchised main dealers too as it extends its web across the automotive industry.
For a car dealer that nearly collapsed, that’s quite a resurrection. So much so, there could be others that might still think a Cazoo-style used car business could work in the UK.
Ian Plummer, chief customer officer at Autotrader, said: ‘I think there’s definitely scope for a pure online retailer to operate well in the UK. I think they’d do far better to apply their solution to a good infrastructure of physical premises as well.
‘Cazoo spent an awful lot of money building brand, an awful lot of money developing their presence in other international markets, a lot of money on things like subscription services, and I think if they’d had a narrower focus and stayed driven on the UK – and had done what Carvana did, which was target certain cities and really zoom in on being great in certain cities and then expand progressively – they might have done a lot better.’
Carvana’s story of rise, fall and resurrection is a fascinating one. Speak to any car dealer in the US and they’ll have at least something to say about the firm – and it’s not always positive.
But equally, there’s a lot of respect.
Dealer Playbook podcast host Michael Cirillo added: ‘I think that Carvana are onto something. If you look at an Uber or Amazon or Airbnb, if you really pull it back and look at what they’ve come up with, they didn’t invent anything new. Cars already existed. The concept of vending machines already existed. Online purchasing already existed. Internet, so on and so forth. But Carvana have assembled all of those resources into a new process that feels fresh.’
