2:46 pm, February 22, 2023
Used car dealer Cazoo’s decision to close its car subscription service abruptly has been featured on today’s BBC Radio 4’s You & Yours programme.
Car Dealer Magazine editor in chief James Baggott appeared alongside customer Anthony Baxter on today’s (Feb 22) programme chatting to presenter Winifred Robinson about the firm ending its subscription service early for existing customers.
Cazoo confirmed to the programme in a statement the news Car Dealer exclusively revealed earlier this month – that it was terminating customer agreements with its subscription service.
Car Dealer broke the story on February 1 that the troubled online used car dealer had contacted its customers saying they must hand their subscription cars back within 90 days.
Last June, the firm said it would be closing its subscription service to new customers and then, in December, it contacted customers saying they would waive cancellation fees for those customers who wanted to get out of their deals early.
In January, the firm wrote to customers to tell them they had to hand their cars back to a customer centre within 90 days as the scheme was now coming to an end.
Baxter, who featured in our original story, told Radio 4: ‘When I took out the subscription it was £279 a month for a Kia including road tax, comprehensive insurance, servicing and breakdown cover. So a very good deal which allowed me to do 1,000 miles per month.
‘But Cazoo have sent out letters that says that it’s abruptly ending this agreement. It’s titled “termination for regulated hire agreement” and it says I have to return the vehicle by May 1.
‘I have to take it to the Cazoo service centre. Problem is they’re closing them all here in Scotland. So the nearest one to me is in Northampton, which is a 900-mile round trip from my home. Or I have to pay a £149 fee to have the car picked up.’
Robinson said that was not what Cazoo had told the BBC. She said Cazoo had explained no customer that lived more than 50 miles from a centre would have to pay for collection. Baxter insisted he had been told he had to pay the fee.
Car Dealer’s Baggott explained to the Radio 4 programme that Cazoo had been losing a lot of money in the last few years and that ending the subscription service would bring in cash quickly for the used car dealer.
He said: ‘The Cazoo share price has dropped 98 per cent since they listed so they are struggling and a subscription business is very expensive to do.
‘They’ve probably realised that, as Anthony’s rightly pointed out, these cars are worth a lot to the used car market.
‘We’ve had a very strange period in the last few years where used cars have grown in value. They’re up something like 30 per cent over the last two years. So actually ending those subscription deals now is good for them, because they can sell those used cars while the prices are high, they can bank that cash and put it back into his core businesses of selling used cars.’
Cazoo confirmed to BBC Radio 4 that it was ending its subscription service. Despite repeated attempts for a comment when Car Dealer published its original story, the firm did not respond.
A spokesperson for Cazoo said: ‘In June 2022 we announced that we would no longer be offering cars for subscription and from November 2022 we started to contact subscription customers to explain that, over time, we would be winding down the service.
‘Rather than offer the minimum one month’s notice as required by law to return cars, we felt it was right to go above and beyond and offered customers at least three months’ notice to return their cars.
‘In addition, we have waived the early termination fee and we are working with remaining customers to wind down their contracts. We are doing all we can to make the returns process as easy as possible for our subscription customers.’
The used car dealer splashed out tens of millions of pounds acquiring the subscription 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. It sold Cluno last week.
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.
You can listen to the You & Yours programme on Cazoo from 10:19
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