Cazoo to sell off stock, cease car sales, become rival to Auto Trader and Motors

Online car dealer Cazoo is beginning to sell off its used car stock, transporters and customer care centres as it has announced it will switch to a new business model as a car marketplace, competing with rivals such as Auto Trader, Motors and AA Cars.

A new chief executive will be appointed - the business's third in five years - as current Cazoo chief executive Paul Whitehead has decided to step down at the end of this month. He'll remain an adviser until at least mid-May to support the change from e-commerce operation to marketplace.

The change of strategy comes following a review of Cazoo's options after the cash-strapped business told the New York Stock Exchange in December that it must urgently secure additional capital before the second half of 2024 if it is to keep afloat. It warned investors that it had "limited liquidity" and may need to make substantial adjustments, or potentially cease operations altogether, if it fails to secure adequate funding.

It had already completed a restructuring, resulting in a reduction of debt from $630m to $200m. It also appointed a new board of directors in December, and this board has decided that a pivot to "a pure-play marketplace business model" is the best direction for Cazoo and all its stakeholders.

"This will leverage our key advantages: our brand, which is recognisable and trusted nationwide, and our technology platform, which provides a market leading customer experience, and which will build on the demand from customers and UK dealers to transact online," Cazoo's statement said.

"The adoption of a marketplace model leverages Cazoo’s market-leading e-commerce platform and the more than £100 million investment in the Cazoo brand. The brand is now one of the top five most recognised UK automotive brands and has enabled Cazoo to sell close to 160,000 retail cars entirely online since 2019.

"The board believes Cazoo will bring fresh opportunities for dealers in the highly fragmented used car market, providing Britain’s car dealers with an online platform to offer their vehicles to the one million consumers on average who visit Cazoo’s website every month."

As well as generating leads for dealerships that use its marketplace, Cazoo will enable them to sell cars fully online if desired.

Like other car marketplaces already operating in the UK, Cazoo will provide customer and market insights to the dealers that use it, and it will continue to help the motor trade source stock from sellers.

Cazoo was founded in 2019 by serial entrepreneur Alex Chesterman OBE with an ambition to build an e-commerce brand that disrupted the "property-heavy" motor retail sector and allowed people to buy cars entirely online and get then delivered to their home. Attracting investors, it was able to spend huge sums on marketing and sponsorships and an ill-fated expansion into mainland Europe.

In 2023, before he left the business nine months later, multi-millionaire Chesterman said he was “incredibly proud of everything the team at Cazoo has achieved” in a financial results statement that revealed the online used car retailer’s £704 million losses for 2022.

Cazoo's pivot to a marketplace will leave it positioned similarly to another of Chesterman's past creations, the property marketplace Zoopla, which markets houses for estate agents.

From the archives: Read AM's exclusive 2020 Cazoo launch interview with Alex Chesterman here