Cazoo has confirmed that it will retreat from mainland Europe to focus on the UK used car market as part of cost-saving measures expected to deliver net savings of over £100m by end of 2023.
The online car retailer, launched by Zoopla and LoveFilm co-founder Alex Chesterman, revealed that it was now consulting with unions in mainland Europe as it moved to wind-up its operations outside the UK after taking the decision, which was steered by a recent review of its operations.
Cazoo’s reining in of its ambitions across multiple markets comes just two months after it launched its online car retail offering in Italy in a move that completed its expansion into four countries in mainland Europe over the past six months.
It is just seven months since it set a target of achieving 100,000 annual used car sales and a £2 billion turnover in 2022 after raising a further $630 million (£414.2m) to fund its expansion.
Today (September 8), the company revealed that it is now targeting cash flow breakeven by the end of 2023, at which point the Company expects to still have approximately £100m of cash on its balance sheet.
Chesterman, who set out his ambitions for the business in an AM profile feature back in 2020, said: “Given our target of reaching profitability by the end of next year, we have taken the tough decision to focus solely on the huge UK used car market, worth over £100bn+ annually.
“I would like to thank all our colleagues in the EU who are impacted by this decision, and we will of course look to support them in every way possible.
“We have built a market leading platform, team, brand and infrastructure in the UK, where we have now sold over 90,000 retail units since launch, despite the challenging macroeconomic backdrop.
“The strong customer demand we are seeing in the core UK business gives us high confidence in the future opportunity and the decision we have taken today to withdraw from mainland Europe ensures that our balance sheet remains strong and that we have a plan which we believe no longer requires any further external funding.”
Cazoo said that its European operations had contributed less than 10% of its revenues and retail units in H1 2022.
Highlighting its ongoing opportunity for growth, despite its European withdrawal, it added that its UK retail unit sales had growth by over 100% year-on-year in July and August, despite the challenging macro-economic backdrop.
It added that its new “core opportunity in the UK” continued to expose it to “an enormous addressable market with approximately eight million used car transactions and a value of over £100bn annually”.
At the start of last month AM reported that a slump in Cazoo's share price since flotation had placed it under threat of breaching New York Stock Exchange rules which require listed companies to maintain an average closing share price of at least £1.00 over a consecutive 30 trading-day period or risk being delisted.
The business is battling to reduce its cost base as it announced a £243 million loss from the first half of 2022, more than double its losses in H1 2021.