Online car dealer Cazoo collapses into administration putting 200 jobs at risk

Cazoo, a digital car dealership that was once estimated to be worth $8 billion (£6.3 billion), has gone into administration, endangering the employment of 200 individuals.

Teneo has brought in some new administrators to manage its company. Alex Chesterman, who is a successful entrepreneur and the creator of popular property website Zoopla and the early version of Netflix known as LoveFilm, had originally founded Teneo.

Teneo is currently searching for a purchaser for Cazoo's remaining properties, which comprise its internet marketplace.

After our meeting, we are still in talks with several potential buyers regarding the marketplace division and the customer collections centers that are still available,” Matt Mawhinney, an Teneo administrator, expressed in an announcement.

The marketplace plan is doing better than expected, with many dealers joining, and the management appointment gives us a chance to sell the business in the upcoming weeks.

Only two years after its high-profile listing on the New York Stock Exchange in 2021, the used-car website, which was based in the UK, has experienced a major downfall. The business invested a significant amount of money in supporting various football teams such as Aston Villa and Everton, as well as horse racing, darts, snooker, and cricket events in order to enhance its brand image.

Since its introduction in 2018, the company has managed to sell 160,000 vehicles. Unfortunately, due to inflation that is causing consumers to be more cautious with their spending, the company is facing financial difficulties. As a result, the firm has decided to cease operations in the EU, which has caused the loss of over 700 jobs. Additionally, the company is expected to suffer losses amounting to £700m in 2022.

At the beginning of 2023, Chesterman resigned from his position as CEO and assumed the role of chairman within the company. However, he ultimately left the organization in December.

Cazoo made an announcement in March of this year regarding additional changes, which involved selling a car repair center located in Bedfordshire and customer collection centers located in Birmingham and Bristol. Their main focus is now solely on their online platform for buying and selling cars. Unfortunately, this action resulted in 720 more job cuts.

Although the managers were able to pay back loans and make the business more efficient, they claimed that the company still lacked the necessary funds to keep it running for a long time. The board stated in a filing in the United States that it would be in the best interest of the company and its stakeholders to begin the process of closing down the company.

Around 200 of Cazoo's employees are in danger of losing their jobs. The company's marketplace department in London, which has 124 workers, and its customer collection centres in Manchester and Northampton, where 25 employees work, are particularly vulnerable. Whether these employees will keep their jobs will depend on whether administrators can find a buyer for Cazoo and whether the new owners are willing to keep them on.

An additional 59 workers, mostly from the central office and customer service locations in London and Southampton, will assist Teneo in closing down the company until their services are no longer required.

Cazoo is currently preparing to organize a special meeting with its shareholders on the 6th of June to get their approval for the liquidation process.

Chesterman chose not to provide a statement.