8:14 am, February 1, 2023
Used car dealer Cazoo is reported to have told car subscription customers their deals will be ended early.
Customers have told Car Dealer they received emails from Cazoo this week telling them their deals will be terminated within 90 days.
In a phone call with one customer, the online used car dealer said the reason was ‘due to the economic situation’ and that Cazoo had now decided to ‘dial back subscription’.
Customers say they’ve been given the option to return cars to a Cazoo customer centre – many of which are earmarked for closure as part of recent cuts. If they don’t return the cars themselves they’ll ‘have to pay for collection’ instead.
Anthony Baxter, a former BBC Top Gear producer, told Car Dealer he’d been informed that the deal he took out in December 2021 will be cancelled. It was due to run until the end of 2024.
He said: ‘I’d done a lot of research into car leasing and car buying, and felt that the Cazoo subscription deal was very good: £279/month including VAT on a brand-new Kia Ceed for 36 months. Turns out, it was too good to be true.
‘When I saw Cazoo were pulling the plug on new car subscriptions I sensed bad news around the corner. And here we are today, with an email saying I have no choice but to return the car. I’ve got just three months left.’
Twitter user Sherwood Robyn added: ‘I’ve just got mine [Cazoo email]. I was due another two years on my car.’
It is not known how many subscription customers have received notifications from the firm or the reason for the sudden change. One social media user suggested it could be a way to ‘self-generate used car stock’.
Cazoo has been repeatedly contacted for comment.
The used car dealer said in June last year that it would be running down its ‘cash intensive’ subscription schemes. It splashed out tens of millions of pounds acquiring the firms as part of its rapid growth spurt, most of which is currently being undone.
Cazoo acquired new car subscription businesses Drover in the UK and Germany’s similar business Cluno for undisclosed sums, believed to be in the tens of millions.
In December, Cazoo customers reported they’d been told the cancellation fee would be removed from their contracts if they wanted to end them early.
The step to remove the £500 penalty was likely to be the first attempt to entice customers out of their deals.
Writing on the Money Saving Expert forum, customer Moomoo66 said: ‘I’m in the same boat. I wrote an email to CEO Alex Chesterman but haven’t had a reply.
‘I have been looking around at the subscription deals and the prices are absolutely horrendous. There’s no way that I could afford another subscription car. I think that Cazoo should honour our contracts.’
Baxter said he had been offered a £250 voucher if he bought a Cazoo used car instead when he handed his Kia back.
The message sent from Cazoo to Anthony Baxter
He added: ‘If they were happy to charge us £500 for returning the car early, why can’t they pay us £500 for taking the car back?
‘Also, we have to pay to have the car collected. Customer services say I could return it to a Cazoo prep centre – but my nearest is 100 miles away.’
Last month, Cazoo began consulting with thousands of staff across the UK as it proposed closing 15 customer handover centres and a number of prep centres.
Staff in Cazoo’s technology team and head office are also under the threat of redundancy following the announcement.
The news first broke in an update to the New York Stock Exchange, when the used car dealer said it would be ‘closing more preparation centres and customer handover sites’. However, it did not go into detail as to what these would look like, calling the plan a ‘reset’.
The consultation period ends on March 4 when Cazoo is expected to announce which sites it plans to close.
Cazoo said: ‘‘This plan is in the process of being finalised and we will provide more detailed information at the time of our FY 2022 results.’
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