In the latest indication of a company’s retreat, online auto shop Cazoo has declared it will cease operations in the European Union and lay off 750 employees. The company had intended to revolutionise its industry.
To save money, Cazoo will close its operations in France, Germany, Italy, and Spain and lay off all its staff while continuing to operate just in the United Kingdom.
Following the announcement of layoffs in the United Kingdom in June, Cazoo has already lost 750 employees twice in 2022. It happens as consumer spending is severely constrained as global inflation soars.
Cazoo is one of several online firms formed by internet entrepreneur Alex Chesterman and debuted in 2018 to disrupt the used automobile market by selling directly to consumers.
It has its headquarters in the UK but was merged with a special-purpose acquisition company (Spac), run by wealthy hedge fund investor Dan Och, to get listed on the New York stock exchange.
Cazoo’s market valuation peaked at roughly USD 11 billion in February 2021, indicating that investors appeared to share Alex Chesterman’s goal of “transforming the way consumers buy cars across Europe.”
Cazoo has been increasing, with revenues doubling yearly to £333m in the second quarter of 2022. However, the exact time saw losses of £243 million, which many analysts and competitors have long seen as an unsustainable cash burn.
The company’s market value has fallen in recent months to less than £1 billion, but on Thursday, its share price increased by more than 16% as investors appeared to be encouraged by the idea that spending may slow down.
Just a few months ago, Cazoo decided to sponsor the French football team Olympique de Marseille, the latest in a succession of sports sponsorships as part of its aggressive growth strategy. Cazoo has decided to leave the European Union.
Cazoo includes Real Sociedad and Valencia from Spain, Lille Olympique from France, Bologna FC from Italy, and SC Freiburg from Germany, among the major European football divisions.
Cazoo has gotten in touch with the teams to negotiate an “orderly wind-down” of the sponsorships.
In the United Kingdom, Cazoo continues to sponsor Aston Villa, the Hundred cricket tournament, the Derby in the world of horse racing, and even FishOMania, a sporting fishing competition.
Cazoo CEO Alex Chesterman claimed that leaving the European Union would preserve the company’s balance sheet and prevent the need for additional capital from investors.
Alex Chesterman claimed the “difficult macroeconomic background” the company was operating in was offset by “still solid customer demand” in the UK.
Given that we want to turn a profit by the end of the year, Alex Chesterman stated, “we have made the difficult decision to concentrate only on the massive United Kingdom used car industry, valued at over £100bn yearly.”
“I would want to thank all of our colleagues in the European Union who are affected by this decision, and we will of course look to support them in every way possible,” the statement continued.