Former Tech Darling Cazoo Crashes into Administration

Cazoo, the British online car retailer that was once valued at over £5bn, is set to enter administration on Tuesday. Insolvency practitioners are expected to be formally appointed, just over a week after Cazoo filed for temporary protection from creditors. The company, which made its debut on the New York Stock Exchange in 2021, has seen its fortunes dramatically decline.

The crisis at Cazoo has already resulted in more than 700 job losses, with administrators planning to retain some staff to continue operating the remaining marketplace model while they explore a potential sale. Industry sources suggest that entering administration will allow the administrators to focus on selling the company, as the marketplace model has attracted interest from several potential buyers. Potential suitors for Cazoo's marketplace and brand include BMW, Motorpoint, Car Gurus, and Motors.co.uk, a privately owned used-car platform.

Founded in 2018 by Alex Chesterman, the entrepreneur behind property portal Zoopla, Cazoo quickly rose to prominence, raising substantial funding at increasing valuations. When it listed on the stock exchange in 2021, investors valued the company at $8bn. Cazoo invested heavily in sponsorship deals across football, snooker, and darts to rapidly build its market share.

Recently, Cazoo has sold off several assets, including its vehicle fleet, which fetched higher-than-expected prices due to a current shortage of used cars. One industry insider noted that the shift to a platform model had increased Cazoo's inventory to over 15,000 cars, making it the only online vehicle marketplace where consumers can buy and sell cars under one brand.

Alex Chesterman departed the business several months ago following a restructuring that converted hundreds of millions of dollars of debt into equity. The move into administration follows another wave of restructuring aimed at stabilising the company's balance sheet and operations.

While Cazoo declined to comment on Tuesday, it stated last week: "Our new marketplace model, where consumers can both buy and sell cars, is revenue generating and performing ahead of expectations, with interest from nearly 100 car dealers, including many household names, wishing to trade on the Cazoo platform." The company added that it had "successfully restructured and significantly reduced the cash burn of the group."

As Cazoo faces the challenges of administration, the focus will be on the potential sale and the future of its innovative marketplace model, which has drawn significant interest from industry players.

^{Photo by Kelly}