Cazoo Latest Exit Signals Trouble In Europe's Once-Booming Used Car Market
British auto marketplace Cazoo is selling its German subscription business two years after buying it.
The decision, announced in a Friday (Feb. 17) statement, comes after the online used car dealer informed investors earlier this year of belt-tightening plans that will involve layoffs and the closure of some of its vehicle preparation facilities across Europe in a bid to focus exclusively on the U.K. market.
The sale of its German subscription business, Cluno, marks the completion of Cazoo’s withdrawal from the European country, with a transfer of the company’s total assets made to Stuttgart-based ViveLaCar, another vehicle-subscription platform operating in Germany, Austria and Switzerland.
Cazoo’s U.K.-focused strategy has already led to the disposal of its Italian and Spanish businesses, and today’s announcement signals the end of the retailer’s dreams of making it big in mainland Europe.
“Following this transaction, together with previously announced sales of other businesses and assets in Europe, the withdrawal of Cazoo from mainland Europe is now largely complete,” the statement noted.
Moving forward, the U.K. firm is pinning its hopes on cost-saving measures to accelerate its path to profitability without needing to raise further external funding over the next 18 months to 24 months.
“We remain laser-focused on further improving our unit economics as we drive towards profitability, whilst remaining one of the fastest growing used car retailers in the U.K.,” CEO Alex Chesterman has previously said.
EU Used Car Market Struggles
Competition in Europe’s used car market intensified during the pandemic, fueling a surge in online car sales as consumers embraced the convenience of buying and selling secondhand vehicles online.
But like many industries, the once-booming market has been hard hit by ongoing macroeconomic conditions, even forcing the U.K. marketplace operator to narrow down its 2023 sales target from 50,000 to 40,000 retail units this year.
Similarly, rival businesses in mainland Europe have not been spared. Last year, Amsterdam-headquartered marketplace operator CarNext closed its operations in the Netherlands after raising 400 million euros ($427.5 million) in fresh funding, announcing on its website that it had stopped selling used cars to consumers in its home turf.
The Dutch company, which Constellation Automotive Group acquired in October 2021, has also axed its business-to-consumer (B2C) activity in Italy, Germany, Norway and more recently France per each country’s local website while maintaining its sales activity to business-to-business (B2B) customers.
It remains to be seen what will become of CarNext’s B2C business in Spain and Portugal, where operations appear to be ongoing for now.
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