United Kingdom-based Cazoo, an inspection-cum-car selling store, has emerged as a disruptive force in the used car market since 2019. Through it, buyers can select the vehicle online and get it delivered to their doorsteps in the next 72 hours, after the completion of 150-plus safety and quality checks. If the customer doesn’t like the product, he/she can return it without extra charges.
Knowing Cazoo In Detail
Cazoo’s portfolio has a wide range of used cars, be it high-end brands like Audi, Land Rover, BMW, and Mercedes-Benz or common names like Ford, Kia, Nissan and Volkswagen.
Cazoo’s ‘Car Finance’ programme helps its customers to tailor their vehicle finance plans as per their household budgets and then go for the used car fitting in that bill. The buyers can select the vehicles, apply for finance, pay their monthly deposits and complete the paperwork, all online, following which the cars will be delivered either to their doorsteps or they can receive the vehicles from ‘Cazoo Customer Centres’.
Their ‘Car Finance’ programme has two solutions, Hire Purchase (the buyer can spread the car cost by making monthly payments over an agreed term) and Personal Contract Purchase (the buyer can make equal monthly payments over an agreed term. After the contract ends, he/she can decide on whether to hand the car back to the lender or change it for another one/buy the vehicle with an ‘optional final payment’).
Cazoo’s ‘Car Finance’ programme has been drawn in collaboration with European lending giants like Black Horse, Santander and Evolution.
The start-up’s ‘Car Care’ programme covers areas such as warranty extension, thorough car servicing and paint and fabric protection.
For those planning to sell cars, Cazoo states on its website, “You can drop your car off at your nearest Customer Centre for free and in as little as 48 hours, or we can pick the car up from your door with prices starting from £149. The pick-up fee will be deducted from the value of your car. Cars that are valued at £25,000 or more must be dropped off at a Customer Centre for processing due to their value.”
Not Every Vehicle Meets Cazoo’s High Standards
Cazoo doesn’t buy first-hand vehicles which have issues identified by a car history check, contain damages, stolen/scrapped, have mileage discrepancies, lack legal tyres, and have been used for rental and authority purposes/driving lessons. Also, 15-year-old cars, along with the ones with insurance issues and modified automobile parts, are not preferred either.
Cazoo’s Maintenance Check Involves
- To recondition the used cars before handing them over to the customers
- After reconditioning, it displays detailed images of the car on its website
- Cazoo technicians test drive every used car to check its engine performance, steering, brakes and other engineering parameters, before handing them over to the customers
- Executing oil and filter changes on every car with less than three months to go before its next service and listing for sales
- Valet the cars and thoroughly sanitise them before handing them over to the customers, while ensuring the vehicles are having 10 litres of fuel (or 75% of charge, in the case of an electric vehicle) during the deliveries
- During delivery, Cazoo also provides a 90-day warranty and RAC roadside assistance for these used cars
- Its ‘7-Day Money Back Guarantee’ gives the customers a week’s time to drive up to 250 miles, in order to know and get acquainted with the car. Cazoo’s customer care also gets in touch with the customers during the same timeframe to get feedback
Latest Developments Around Cazoo
The company, launched in December 2019, was valued at USD 7 billion (over £5.2 billion) when it was listed on the New York Stock Exchange in August 2021. However, it is facing a market test right now.
In June 2022, the company stated its intention to cut costs by £200 million by 2023 end, which would result in around 750 job cuts.
Cazoo has removed 15 of its 22 used car handover centres from its website, as part of its business restructuring. It has already withdrawn from the European market, apart from axing its car subscription services and selling its Cazana used car data business.
It intends to retail 40,000 to 50,000 used cars in 2023, in order to achieve profitability after delivering 65,000 sales in 2022, down on its earlier 100,000 unit target. Cazoo’s revenues in 2022 had risen to £1.25 billion from £668 million in 2021. The start-up won’t raise additional capital in the next two years, as it ended 2022 with a balance sheet of over £250 million of cash and other assets.
However, Cazoo is showing signs of a rebound in 2023, as its founder and CEO Alex Chesterman commented, “Our January and February retail sales volumes and revenues were in line with expectations and, as we focus on unit economics, we continue to notably improve our retail GPU which is tracking at ~£900 so far this year, up from ~£600 in Q4 2022. The fact that we have now sold well over 100,000 cars entirely online in the UK in the three years since launch demonstrates the continued consumer shift online as they embrace the transparency and convenience of our market-leading digital used car buying and selling experience.”
Jonathan Dunkley, a 20-year veteran in the used car industry, who was working as a strategic advisor to Cazoo since 2021, has been appointed as the company’s Chief Operating Officer, as the business now eyes ending 2023 with over £100 million of assets in its balance sheet.
Image Credits: Cazoo