Cazoo administration: share price falls as UK cars retailer on brink of collapse with 1,000 jobs at risk

Online used car retailer Cazoo - which says it has sold 120,000 cars in the UK - is on the brink of collapse, putting around 1,000 jobs at risk.

Cazoo's recent filing with the US Securities and Exchange Commission meant that it had to either find a buyer or appoint administrators within 10 days. The company has since initiated proceedings to appoint administrators at the High Court.

The potential move towards administration comes following the firm’s struggles to secure funding from investors and failing to meet the deadline for filing its annual accounts, a downturn in the used car market, and concerns over sluggish demand for electric vehicles.

Once hailed as a success story of the pandemic era when consumers shifted to online car purchases, Cazoo is now facing a dramatic downturn. Launched in 2018 by Alex Chesterman, known for founding Zoopla and LoveFilm, the company initially soared in value.

With an aggressive marketing strategy, Cazoo secured sponsorship deals across multiple sports, partnering with numerous football clubs (including Premier League teams Everton and Aston Villa), as well as events like the Hundred cricket tournament and the PDC World Darts Championship.

Read more: The best used cars in the UK under £14,000 revealed

But its fortunes have since plummeted, dropping from a $7 billion (£5.6 million) valuation upon its 2021 listing on the New York Stock Exchange to a mere $30 million (£24 million).

Initially, Cazoo operated by owning its entire inventory of used cars and offering delivery services from distribution hubs throughout the UK.

But in an attempt to salvage its operations, Cazoo shut down its European business, sold off its vehicle stock and shifted to an online marketplace model in March, allowing car dealers to list their own stock on its platform.

Despite its high valuation, Cazoo has never turned a profit. Its losses widened to £704 million in 2022, up from £544 million the previous year, and in December, the company restructured £630 million of debt.

Efforts to stave off insolvency, such as exploring strategic alternatives and selling parts of the business, have not been successful, and the company's workforce has significantly reduced from 4,500 employees across Britain and Europe in 2021 to around 1,000 currently.

Leadership turnover has also plagued Cazoo. Founder Alex Chesterman transitioned from CEO to chairman in January 2023 before departing from the company entirely in December. His successor as CEO, Paul Whitehead, resigned in March.

Freshfields, a Magic Circle law firm, is advising Cazoo, a legal filing showed.