Cazoo has gone into administration. What does this mean for its customers who bought its used cars?
Cazoo, founded in 2018 to sell used cars online, has appointed administrators to put it into voluntary liquidation and sell the business.
It recently made 728 employees redundant and sold all its stock after deciding earlier this year to change to advertising dealers’ used cars instead of retailing its own vehicles.
The administrators have said that Cazoo’s customers with extended warranties are not expected to be impacted. The Administrators will be contacting customers with service plans and warranty claims (excluding extended warranty) to outline their options.
As Cazoo stopped selling used cars in April 2024, Cazoo does not hold any customer deposits and all customer vehicle deliveries have been completed.
Cazoo began restructuring its business at the end of last year. It has subsequently sold some parts of its businesses and other assets to provide funds for creditors. Approximately 208 Cazoo employees will keep their jobs while they wind down the business until it is sold.
Confirming its plans for Cazoo, the administrators said: “Following our appointment, we continue to progress discussions with a number of interested parties on the Marketplace business and remaining customer collections centres.”
For those who may feel unsure about buying a used car via Cazoo, Carwow can help anyone looking to change their car for a new or used one, and get a free valuation.
Why did Cazoo fail?
Cazoo officially launched in December 2019 as an online retailer of used cars which it delivered direct to customers with its own fleet of liveried vehicles. At its peak, Cazoo was valued on the New York Stock Exchange at £5 billion.
After securing millions in funding, it followed an ambitious growth plan and also expanded into Europe, reaching a total of 4,500 employees. It also added a UK retail network by acquiring car supermarket businesses and spent millions on advertising campaigns and sport sponsorship deals.
However, in 2020 it reported a £102.7 million loss and then a £329 million loss in 2021. In 2022 it announced extensive cuts, including closing its operations in mainland Europe, but by the end of 2023 recorded a £704 million loss. After refinancing its debts at the end of 2023, in March 2024 Cazoo announced its business would change from being an online retailer of used cars to listing stock for dealers instead.
There is a lot of media speculation on the reasons for Cazoo’s problems, such as over ambitious growth plans, the huge amount of money it spent on acquisitions and advertising, the supply chain issues the car industry experienced in 2022 and 2023, and the cost of living crisis. In an interview with the BBC, Kevin Gaskell, former Managing Director of Porsche, Lamborghini and BMW said Cazoo’s problems were: “A simple fact of trying to get a foothold in a very sophisticated, very established market. They’ve spent a huge amount of money developing the brand. In terms of their revenue, it has got nowhere near where they expected it to be.”
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Sophie Anderson, a UK-based writer, is your guide to the latest trends, viral sensations, and internet phenomena. With a finger on the pulse of digital culture, she explores what’s trending across social media and pop culture, keeping readers in the know about the latest online sensations.
