2 months ago
Cazoo plans to end the sale of used cars and become an online advertising marketplace to rival the likes of Auto Trader and Motors.
In a bombshell announcement to investors today, Cazoo said it would be ‘transitioning to a pure play automotive marketplace’.
The used car dealer said it would be ‘unwinding’ its stock from today and selling it via retail and wholesale channels.
It will also make further job cuts – following the large swathes of redundancies it announced last year – as it moves to being a marketplace.
Jobs are being cut in its e-commerce division, data, brand, digital marketing and commercial departments as a result. The number of job losses is not yet known.
Cazoo made the announcement today in an update to investors on the New York Stock Exchange (NYSE).
The used car dealer also said CEO Paul Whitehead – who was only appointed to the role at the beginning of February – would be stepping down at the end of March and that it was exploring options to delist its shares.
The move comes off the back of serious concerns over the firm’s future and its moves to restructure its debt.
The announcement follows the shake-up of the board and founder and former CEO Alex Chesterman’s departure in December when the financially troubled company restructured its debt in a deal that saw its $630m borrowings converted to just $200m.
Chesterman angered used car dealers when he arrived on the motor trade scene and labelled them ‘sharp-elbowed salesmen’. He also claimed that the traditional method of selling cars was ‘flawed on every level’.
Chesterman, who also founded Zoopla and Love Film, lambasted dealers for only offering ‘7 minute test drives’ and claimed buying a car from a dealership was ‘inconvenient’.
It now appears the used car business expects those same car dealers to put their hands in their pockets to advertise on its site.
Whitehead said: ‘Transitioning Cazoo to a pure-play automotive marketplace business model leverages our key advantages: the nationally recognised and trusted Cazoo brand and the Cazoo ecommerce technology platform.
‘We have built a data-driven business for buying and selling cars, and having sold close to 160,000 cars we have demonstrated that there is robust demand for online transactions in the automotive market.
‘Our transition means we can now offer the UK’s 13,000 car dealers the chance to put their forecourt stock in front of the one million potential customers on average who visit the Cazoo website every month.
‘The UK used car market represents a significant opportunity for Cazoo, with approximately seven million transactions annually, worth an estimated £100 billion.
‘We look forward to completing this transition and starting an exciting new chapter for Cazoo, building upon our investment in both the Cazoo brand and in our ecommerce technology platform.’
Following its debt/equity exchange last year, Cazoo said it would stay listed on the NYSE until at least March 20, 2024 but would have no obligation to remain listed or registered with the Securities and Exchange Commission after then.
Reacting to today’s news, David Kendrick, CEO of chartered accountants UHY Hacker Young, told Car Dealer: ‘This really isn’t a surprise – the business has been teetering on the brink for some while, and clearly the consumer does not like the model they have created.
‘This step is simply to preserve any value left in the brand. However, taking on Auto Trader is a brave move – they are a hugely strong brand and people have tried before and failed!
‘For me, it’s only a matter of time before someone buys the Cazoo brand for a very low value.’
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