11:59 am, September 8, 2022
Online used car retailer Cazoo today made the shock announcement that it would be pulling out of mainland Europe.
Cazoo had been operating in Italy, France, Germany and Spain but said there would be ‘an orderly wind-down’ in Germany and Spain, and that it was consulting with employee representatives in France and Italy.
It follows a strategic review by the self-styled online disruptor as well as the news that it would be slashing 750 jobs in the UK and elsewhere plus cutting costs as well as half-year results that showed it more than doubled its losses to £243m for the six months to June 30.
Cazoo’s withdrawal from the four EU nations means another 750 jobs will be lost.
It had a string of sponsorship deals with football clubs in all four countries, costing it many millions of pounds, but is understood to have been in touch with them to arrange the wind-down of the arrangements.
In August 2021, Cazoo listed on the New York Stock Exchange after completing a merger with special purpose acquisition company Ajax I.
Cazoo launched in the UK in December 2019, and acquired Spanish digital car subscription marketplace Swipcar in November 2021.
Based in Barcelona, Swipcar had a growing presence in Italy and Portugal, said Cazoo, adding at the time that the deal would accelerate its planned launch in Spain and Italy in 2022.
It then launched into the French and German markets in December 2021.
The company said today (Sep 8) that following the review, which it launched last month, management had concluded that the right course of action was for it to focus exclusively on its core UK market, which it said offered some eight million used car transactions and a value of over £100bn a year.
It said it would be concentrating on cash preservation and now expected to break even by the end of 2023.
‘The demand for our proposition leaves management very excited about the future opportunity for Cazoo and its ability to capture a five per cent or greater UK market share,’ it said in a statement.
It added that the EU businesses represented less than 10 per cent of company revenues and retail units in the first half of 2022 and it believed the decision to axe operations abroad should have a limited impact on its 2022 revenue and unit targets.
Founder and chairman Alex Chesterman said: ‘Given our target of reaching profitability by the end of next year, we have taken the tough decision to focus solely on the huge UK used car market, worth over £100bn+ annually.
‘I would like to thank all our colleagues in the EU who are impacted by this decision, and we will of course look to support them in every way possible.
‘We have built a market leading platform, team, brand and infrastructure in the UK, where we have now sold over 90,000 retail units since launch, despite the challenging macroeconomic backdrop.
‘The strong customer demand we are seeing in the core UK business gives us high confidence in the future opportunity and the decision we have taken today to withdraw from mainland Europe ensures that our balance sheet remains strong and that we have a plan which we believe no longer requires any further external funding.’
