British online car retailer Cazoo, once valued at over £5bn, is set to enter administration on Tuesday. According to sources familiar with the matter, insolvency practitioners from Teneo will be formally appointed just over a week after Cazoo filed for temporary protection from creditors.
As a result of the company’s financial crisis, over 700 employees have already lost their jobs. The administrators are expected to retain a number of staff to continue operating the remaining marketplace model while exploring a potential sale.
Sources in the motor industry have revealed that Cazoo’s entry into administration will allow Teneo to focus on finding a buyer. The marketplace model has reportedly garnered interest from several potential suitors.
On Monday, Cazoo’s wholesale arm was sold to industry player G3, while Constellation Automotive, the owner of Cazoo’s rival Cinch, acquired assets from the struggling New York-listed company. One industry source mentioned that among the parties interested in Cazoo’s marketplace and brand are BMW, Motorpoint, and Car Gurus. Privately owned used-car platform Motors.co.uk is also among the potential buyers.
Cazoo was founded in 2018 by successful entrepreneur Alex Chesterman, known for creating the property portal Zoopla. The company raised several rounds of funding before going public in 2021 with a valuation of $8bn. In an attempt to gain market share, Cazoo spent millions on sponsorship deals in football, snooker, and darts.
Recent weeks have seen the sale of Cazoo’s vehicle fleet, reportedly achieving higher-than-anticipated values due to a current shortage of used cars in the market. Additionally, sources have revealed that the platform model has resulted in an inventory of over 15,000 cars, making Cazoo the only online marketplace where consumers can buy and sell cars under a single brand.
Several months ago, Mr. Chesterman left the company following a balance sheet restructuring that converted hundreds of millions of dollars of debt to equity. The decision to enter administration comes after further restructuring efforts to improve the company’s balance sheet and operations.
Cazoo declined to comment on Tuesday, but last week stated that their new marketplace model, where consumers can buy and sell cars, is generating revenue and performing above expectations. The company has received interest from nearly 100 car dealers, including many well-known names, looking to trade on the Cazoo platform. Additionally, Cazoo noted that they have successfully restructured and reduced the group’s cash burn. Teneo declined to comment on the matter.
