8:08 am, May 16, 2023
Used car dealer Cazoo’s ill-fated foray into mainland Europe is finally over as it announces the completion of the sale of its German car subscription business.
The deal to sell Cluno was finalised late yesterday and marks the end of Cazoo’s retreat from the EU.
Cluno has been sold to ViveLaCar and The Platform Group. The financial terms of the deal have not been disclosed.
Cazoo said: ‘This transaction, together with previously announced sales and wind-down of other businesses and assets in Europe, concludes the withdrawal of Cazoo from mainland Europe.’
In Cazoo’s annual results the firm revealed its administration expenses – largely down to the cost of shutting down businesses it had previously bought – cost it £530m in 2022, up from £219m the year before.
Cazoo bought Cluno in February 2021 as it ramped up its expansion plans in an attempt to become a dominant used car business across Europe. It did not reveal how much it paid for the firm.
In recent months the firm has made thousands of people redundant, shut down 15 of its 22 customer centres across the UK and scaled back its vehicle preparation operations.
Cazoo has also sold its operations in Italy and Spain, shut down its car subscription business in the UK and sold its data business Cazana.
Meanwhile, founder Alex Chesterman has stepped back from the CEO role and handed the reins to Paul Whitehead who is now being assisted by former Carshop CEO Jonathan Dunkley.
Share price fall
Cazoo’s share price has fallen 43 per cent in the last month and was yesterday trading at $1.30, valuing the business at just $50m (£40.2m).
When the business floated on the New York Stock Exchange it was valued at £5bn.
The share price has fallen further despite a first quarter update at the end of April which showed profit per unit was improving.
First quarter numbers also revealed the number of used cars it had sold in the period had fallen seven per cent and revenue was down 11 per cent.
David Kendrick, CEO of accountancy firm UHY Hacker Young, said: ‘It’s baffling how a business can get a strategy so wrong and spend so much money on growth and acquisitions, to backtrack almost to where they started.
‘Yes, they have built a brand, but at what cost?
‘With a market cap of £40m how low can it go before someone buys the brand, or will it survive that long as what is the business plan now? A UK online-only car retailer – many have tried and failed in this market before.’
In February, Cazoo merged its share capital to boost its share price after it fell foul of NYSE rules that state listed stock must have a consistent price above $1. It is now perilously close to that ceiling once again despite the merger.
Cazoo said in its last update to investors that it was confident in its new business plan. New CEO Whitehead explained the business closures would save it £25m per quarter and that it was stemming its cash burn.
It is aiming to finish the year with cash (and cash equivalents) of £110m-£130m. At the end of the first quarter it had £215m banked.
The used car dealer now has a goal of selling between 50,000 and 60,000 cars this year – 40,000-50,000 of which will be to retail customers.
Whitehead said: ‘We are applying a more targeted approach to which vehicles we buy, guided by our proprietary data of their desirability, with a better selection of models available on our website driving better margins.’
Pic credit: NYSE
