Online car retailer Cazoo has announced it will close its operations in the European Union and cut 750 jobs, in the latest sign of the exit of a company hoping to transform its sector.
The company will lay off all employees in France, Germany, Italy and Spain after the closure and will only operate in the UK to save money.
It is the second time in 2022 that Cazoo has cut 750 jobs after announcing cuts in the UK in June. This comes amid strong pressure on consumer spending as inflation picks up worldwide.
Founded by internet entrepreneur Alex Chesterman and founded in 2018, Cazoo is one of a group of online startups aiming to disrupt the used car industry by selling directly to consumers.
It is based in the UK but is listed on the New York Stock Exchange through a merger with a special purpose vehicle (Spac) led by billionaire hedge fund manager Dan Oh. In announcing the merger, Chesterman said he wanted to “change the way people buy cars across Europe,” and investors appear to be embracing that vision, with the company’s market value in February 2021 reaching nearly $11 billion (£9.6 billion) peaking.
The company has grown rapidly, with revenues doubling year over year to £333m in the second quarter of 2022. Losses for the same period, however, came to £243m – cash that many analysts and colleagues have long expected to see as no. sustainable.
The company’s market value has plunged to less than £1 billion in recent months, but the share price rose more than 16% on Thursday as investors appeared to welcome the prospect of lower costs.
The decision to leave the European Union comes just months after Cazoo agreed to sponsor French football club Olympique de Marseille as part of an aggressive growth strategy through a series of sports sponsorships.
In the EU’s top football league, Cazoo also includes Spain’s Real Sociedad and Valencia, France’s Lille Olympique, Italy’s Bologna FC and Germany’s Freiburg. Cazoo has contacted the team to negotiate an “orderly termination” of the sponsorship.
In England, Cazoo remains a sponsor of Aston Villa, the Hundred cricket competition, the Horse Race Derby and even FishOmania, a sport fishing event.
Chesterman, Cazoo’s chief executive, said leaving the EU would protect the company’s balance sheet and ensure it wouldn’t have to ask for more funds from investors.
He said the company faced a “challenging macroeconomic environment” but said “there is still strong customer demand” in the UK.
“With our goal of being profitable by the end of next year, we have made the difficult decision to focus solely on the huge UK used car market, valued at more than £100bn per year,” said Chesterman.
“I would like to thank all colleagues in the EU who were affected by this decision and we will of course try to support them as much as we can.”