Three years after Cazoo’s public listing on the New York Stock Exchange, which saw the online used car seller valued at £6.3 billion, the operator entered administration last summer.
Within a matter of weeks, the Cazoo brand and its marketplace technology was sold to Motors.co.uk in a cut-price deal worth just £5 million.
Cazoo’s administrators, Teneo, confirmed that £2.6 million had been achieved from the sale, with a further £2.4 million anticipated by the end of last year. Cazoo’s wholesale division was also sold on, with vehicle auctioneer G3 taking the reins.
Motors.co.uk already operates a network of car websites, including partnerships with Gumtree and eBay. Its CEO, Barry Judge, said the firm had the “expertise and inventory” to relaunch Cazoo as a contemporary online marketplace for used cars. Judge said the aim is to leverage Cazoo’s existing brand recognition with consumers to help drive more sales inquiries for its dealer partners.
The Growth Story of Cazoo
Cazoo was established by British entrepreneur, Alex Chesterman, in 2018, with a plan to create a global marketplace for selling second-hand cars. It was inspired by the success of We Buy Any Car, which now has 500 UK locations and a further 170 locations throughout the U.S. We Buy Any Car’s parent company, British Car Auctions (BCA) was sold to a private equity form, TDR Capital, in a deal worth £1.9 billion in November 2019.
We Buy Any Car’s success has tapped into consumers’ need for speed, not just in the acceleration of their vehicles, but in the haste with which they need to buy or trade-in their automotives. It’s inspired brands in other industries too, with SellHouseFast adopting a “we buy any house” mantra thanks to its cash buying service for residential properties of all ages and conditions. Offering sellers a free cash offer within minutes, the service has streamlined the house-selling process for those who want a swift sale. Although these online companies are very popular in each of their respective sectors, and we can only see this growing as time goes on, Cazoo ultimately failed to replicate a similar business model.
Cazoo soared in popularity in the early 2020s when public health restrictions made it harder for shoppers to browse for new and used cars. Cazoo then doubled-down on its early success, securing sponsorship deals with Premier League football sides, Everton and Aston Villa, before hosting a string of high-profile sporting events in snooker and darts.
The premise, allowing buyers to lock in a new vehicle delivered to their doors within 72 hours, coupled with a seven-day returns policy, made Cazoo an instant hit.
What Caused Cazoo’s Downfall?
Cazoo underwent a rapid expansion, spreading its wings into mainland Europe via France, Spain, Portugal and Germany. The decision to expand quickly, in hindsight, may have been somewhat hasty.
Kevin Gaskell, former managing director at Porsche, BMW and Lamborghini, said Cazoo’s biggest error and mistake was looking to “provide a full service” as an “online retail business” but there was “nothing new” in their business model that a retail car dealership could not deliver.
Despite investing heavily in its marketing and brand development, Cazoo never managed to turn a profit. It lost £704m in 2022 and £544m in 2021, despite the company and brand appearing very popular. After exploring other alternatives to insolvency to no resolve, the firm was forced to close after failing to raise additional cash with no prospective buyers coming forward to take Cazoo on.