Yahoo Finance Cazoo chief executive steps down after 97pc collapse in value
Cazoo, the beleaguered online used car dealer, said its founder Alex Chesterman will step down as chief executive after a 97pc collapse in share price.
Mr Chesterman, who made his name founding house price site Zoopla and LoveFilm, which he sold to Amazon, will retain his job as executive chairman and Paul Whitehead, currently chief operating officer, will replace him in the top job.
Cazoo described the splitting of Mr Chesterman’s roles as “customary” and said it would allow its founder to focus on strategy, with Mr Whitehead running the business day-to-day.
The troubled company, which has lost more than nine tenths of its value since it was listed in 2021 on the New York Stock Exchange, also cut its target for car sales in the UK this year.
Cazoo said it would now target a more modest 40,000-50,000 car sales this year in Britain for 2023 compared to the 65,000 it sold last year. It will instead focus on higher margins and faster sales.
When it listed in the US through a so-called special purpose acquisitions vehicle (Spac) in 2021, Cazoo raised $1bn to value it at $8bn (£6.4bn). Since then it has dropped to a value of $233m, a collapse of 97pc.
The loss making company has sold out of its Italian and Spanish businesses and it has largely wound down its French and German operations, extinguishing a grand plan to dominate online European second-hand car sales.
Mr Chesterman’s ambition to repeat his successes with LoveFilm and Zoopla have been hampered by the fragmented and highly competitive nature of the used car market.
Customers have access to accurate pricing information for their cars through free price comparison websites, which squeezes margins for dealers.
The company’s business model of delivering a used car after a few clicks has also been replicated by the company’s rivals. They also offer test drives, the traditional showroom experience and other facets of the car buying experience Mr Chesterman was hoping to dispense with, but which proved important to some car buyers.
Mr Chesterman said: “Our new 2023 plan, which includes more modest top line ambitions, ensures that we continue to improve our unit economics, reduces our fixed costs and conserves cash as we make continued progress towards our goal of reaching profitability, without the need to raise further funding over the next 18-24 months.”
His plan was to mimic US business Carvana, another company whose value has crashed in recent years.
Declining used car prices, which had risen during the pandemic, have hit the bottom line of Carvana and its peers in America.
Cazoo will also cut more jobs, it said, adding that it will reveal how many later in the year.
Its new plan should avoid the need to raise fresh funds for the next 18 months, it added.
Last year Cazoo announced 750 job cuts and a hasty retreat from the new car leasing business. Just seven months ago Cazoo spent £24m expanding further into the market with the purchase of Spain’s Swipcar.
After spending tens of millions of pounds on advertising, four in five UK adults know about the company.
But that vast advertising spend is what has helped keep it in the red.
