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Explosive Cazoo dossier reveals used car dealer ‘may never achieve profitability’

  • Document filed late with the SEC lays bare Cazoo’s concerns
  • Business reveals for the first time how much it paid for Imperial Cars
  • Catalogue of woe exposed as Cazoo explains hurdles it is facing in years to come

Time 9:08 am, May 6, 2022

Cazoo has warned investors that it has ‘a history of losses’ and ‘may never achieve or maintain profitability in the future’.

The online used car disruptor made the admissions in a late report to the Securities and Exchange Commission (SEC) that was released overnight (May 5-6) by the independent agency of the US federal government.

The document includes details of the current state and historic purchases of Cazoo – including admitting for the first time that it spent £23.8m on Imperial Cars, the supermarket group it bought in 2020.


The dossier has 79 points that outline potential weaknesses in Cazoo’s business and is spread across more than 30 pages.

Shares in the business have plummeted since it listed on the New York Stock Exchange last August – down 88 per cent. The stock has fallen 41 per cent in the past five days alone.

Earlier this week, it was revealed in an announcement from the SEC that Cazoo had been given a 15-day grace period to file this report with the governing body.

Cazoo said in the document: ‘We have not been profitable since we began operations in December 2019 and had an accumulated loss of approximately £664.3 million as of December 31, 2021.

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‘We expect to continue to incur losses in the near future as we make significant investments to further develop and expand our business (including investments in the acquisition of synergistic companies, infrastructure, advertising and the expansion of our vehicle inventory).

‘While we believe we will become profitable in the future, these investments may not achieve the anticipated results and as such we cannot guarantee we will become profitable, achieve the levels of profit anticipated or achieve profit at all.’

The document continued that Cazoo ‘may continue to incur losses in the future’ for a number of reasons.

The group says ‘slower than anticipated adoption of online channels for car buying, slower than anticipated demand for car purchases and subscriptions and our related products and services’ may affect its business in the future.

And the online used car dealer says ‘increased competition’, ‘weakness in the automotive retail industry’ and ‘ability to source inventory’ are also concerns for its future viability.

Cazoo warned that if revenues dropped it ‘may not be able to reduce costs in a timely manner’.

The wide ranging report covers many other risks to the business, which has grown rapidly through acquisitions and spent huge sums on marketing.

The report added: ‘If we continue to grow rapidly, we may not be able to manage our growth effectively.’

The firm is also worried about whether it will be able to ‘attract a sufficient audience to our website in a cost-effective manner’.

Chesterman shareholding

The report also warns how the ‘concentration of ownership’ with founder Alex Chesterman’s 23.2 per cent stake and that of Daily Mail-owner DMGT may delay or prevent a change in ownership and is ‘not be in the interest of our shareholders’.

The costs the business is facing were also revealed in the document, with some £65.2m spent on marketing, customer experience, advertising and other marketing related costs last year. The business ‘anticipates that these expenses will increase in future reporting periods’.

Cazoo added that its business relies on being able to upgrade its website and it ‘may not be able to maintain the level of capital expenditures necessary’ to do this ‘in a timely manner or at all’ in the future.

The document even lists the money spent on acquiring other businesses since the company begun, stating for the first time that Imperial Car Supermarket was purchased for £23.8m including cash and stock in July 2020.

In 2021 it purchased Drover January for £65.4m, followed by Smart Fleet Solutions for £39.1m the next month as well as Cluno for £60.4m, including £28.7m in cash and £31m in the form of Series D Cazoo shares.


In September, it bought Cazana and SMH Fleet Solution for £23.7m and £76.5m respectively.

It ended the year with the purchase of Swipcar for £23.6m in November and Vans 365 for £7.9m.

Cazoo revealed that vehicle inventory accounted for £364.6m, or approximately 31 per cent of its total assets, as of December 31, 2021.

During the same period it had approximately £178m in committed car financing facilities and approximately £67m in financing for fleet and subscription vehicles.

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As of the end of last year it had an outstanding debt of £249m, with £178m in stocking loans costing £4m in interest annually and it increased this by a further £25m on March 22, 2022. The further £67.2m was in financing facilities for its subscription cars.

The document also doubled down on the ‘material weaknesses’ within the business that led to the delay in publishing the report, writing that ‘in connection with our preparation and the audits of our financial statements as of and for the years ended December 31, 2021 and 2020, we have identified material weaknesses as defined under the Exchange Act in our internal control over financial reporting.’

In an interview with the Times earlier this week, Chesterman said he wasn’t worried about the future of the business saying: ‘I can give you a lot of names that have been hit harder than we have’. He added that investor fears were the nature of views ‘around high growth and risk today’.

Rebecca Chaplin's avatar

Rebecca has been a motoring and business journalist since 2014, previously writing and presenting for titles such as the Press Association, Auto Express and Car Buyer. She has worked in many roles for Car Dealer Magazine’s publisher Blackball Media including head of editorial.

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