Cazoo goes into administration: how does this impact its used cars?

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The company known as Cazoo has entered a state of administration. What could potentially happen to the individuals who previously purchased their pre-owned vehicles from the company?

Cazoo, which was established in 2018 to offer previously owned automobiles over the internet, has enlisted administrators to initiate voluntary liquidation proceedings and market the enterprise.

In the past few weeks, the company has laid off 728 workers and liquidated all of its inventory. This decision was made earlier this year when they made the switch from selling their own cars to promoting the sale of used cars by dealers.

According to the administrators, Cazoo customers who have extended warranties will not be affected. However, those customers who have service plans and claims for warranty (excluding extended warranty) will be contacted by the administrators, who will give them information about their available options.

Cazoo put a stop to selling second-hand cars in April 2024, which means that the company doesn't have any customer funds in their possession and they have successfully wrapped up all deliveries of vehicles to customers.

Towards the end of the previous year, Cazoo commenced a process of reorganization. As a result, they sold off certain aspects of their business and some assets to gather the necessary funds for their creditors. While they wrap up operations until a buyer is secured, around 208 Cazoo personnel will remain employed.

The administrators have announced that they are moving forward with the plans for Cazoo. They have said that they are currently engaged in talks with several parties who are interested in acquiring the Marketplace business and also interested in the remaining customer collections centres.

If you're hesitant about purchasing a pre-owned vehicle from Cazoo, Carwow can assist you in finding a new or pre-owned car and provide a complimentary appraisal.

Cazoo's Failure: What Went Wrong?

Cazoo made its debut in December 2019 as a digital dealer of pre-owned vehicles. They transported these automobiles straight to the customers utilizing their distinctive vehicles. At one point, the market value of Cazoo reached an impressive £5 billion on the New York Stock Exchange.

Once it had secured a considerable amount of money, the company proceeded to pursue its ambitious strategy for growth, which included extending its reach into Europe and increasing its workforce to 4,500 employees. Furthermore, it acquired car supermarket businesses to expand its retail network in the UK and invested heavily in advertising campaigns and sports sponsorships, spending millions of dollars.

However, things took a turn in the year 2020 when it declared a loss of £102.7 million, which was later worsened by a whopping £329 million loss in 2021. By 2022, the company had no other option but to announce significant cost-cutting measures, including withdrawing its operations from mainland Europe. Despite this, the company seemed to have hit a rock bottom by amassing a loss of £704 million by the end of 2023. However, the company was able to get back on its feet by restructuring its debts at the end of 2023, and by March 2024, Cazoo made a bold business decision to switch from being an online seller of used cars to listing stock for dealers instead.

Many media outlets are discussing why Cazoo is facing difficulties. Possible reasons include striving for rapid growth, spending large sums on mergers and marketing, challenges in the automobile supply chain during 2022 and 2023, and the cost of living crisis. In a BBC interview, ex-Porsche, Lamborghini, and BMW Managing Director Kevin Gaskell pointed to a different factor: Cazoo attempted to compete in a mature, intricate industry with a significant investment in branding, yet their revenue hasn't matched their expectations.

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