Online car retailer Kazu has announced it will exit its European business and cut 750 jobs.
When the company shuts down, it will lay off all its staff in France, Germany, Italy and Spain, leaving it to operate only in the UK as it tries to conserve cash.
It is the second time Cazoo has cut 750 jobs by 2022, after announcing further UK job cuts in June. It comes amid a sharp squeeze on consumer spending as inflation rises around the world.
Founded by Internet entrepreneur Alex Chesterman and launched in 2018, Cazoo is one of several online startups aiming to disrupt the used car industry by selling directly to consumers.
It is based in the UK but merged with the New York Stock Exchange-listed Special Purpose Acquisition Company (SPAC) and is run by billionaire hedge fund manager Dan Ochs. When announcing that combination, Chesterman said it wanted to “change the way people buy cars across Europe”, and investors seem to have bought into that vision, with the company’s market value reaching $11bn (£9.6bn) by February 2021.
The company is expanding rapidly, with revenues more than doubling year-on-year to £333m in the second quarter of 2022. But at the same time losses came in at £243m – a cash burn that many analysts and rivals have long been concerned about. It is believed to be unsustainable.
The company’s market value has fallen to around £1bn in recent months, but its share price rose more than 16 per cent on Thursday as investors cheered the prospect of cost cuts.
The decision to leave Europe comes a few months after Kazoo agreed to sponsor French football club Olympique de Marseille in the near future as part of its aggressive growth strategy in various sports sponsorships.
In football’s top European leagues, Kazo counts Spain’s Real Sociedad and Valencia, France’s Lille Olympique, Italy’s Bologna and Germany’s SC Freiburg. Cazoo has contacted teams across Europe to negotiate a “roll-down” of sponsorships.
In the UK, Cazoo retains sponsorship of Aston Villa, a hundred cricket tournament, a horse racing derby and even FishOMania sport fishing.
Kazuo CEO Chesterman said leaving Europe would ensure the company’s balance sheet and no need to call on investors for additional funding.
The company faced a “challenging macroeconomic backdrop”, but said there was “still strong customer demand” in the UK.
“Given our target to reach profitability by the end of next year, we have taken the tough decision to focus exclusively on the UK used car market, which is worth over £100bn a year,” he said.
“I want to thank all our colleagues in the European Union who were affected by this decision, and of course we want to support them in any way possible.”
