Cazoo shifts into reverse gear over European dream

CAZOO has raised the prospect of pulling out of its European expansion just months after launching in Germany, France, Italy and Spain.

It comes as the online car dealer unveiled a loss of £243m for the first half of the year.

In an attempt to conserve cash, the company has begun a strategic review of its EU businesses. The process is at an early stage, but it is understood that pulling out of some or all of the markets could be an option.

While Cazoo sold twice as many cars in the first six months of the year compared with the same period in 2021, its gross profit per car fell to £226 from £315 a year ago, causing losses to more than double compared with £102m in 2021.

Cazoo bought Swipcar in Spain in November for €30m (£25m), launched in France and Germany in December and bought the Italian used car retailer brumbrum in January for €80m.

Until recently, Cazoo had hailed a “substantial” opportunity to build its presence across Europe, which it said was a market worth more than £475bn.

The company said it expected its performance to improve in the second half of the year. Stephen Morana, chief financial officer at Cazoo, said: “We expect further considerable progress in the second half of the year. At the same time, we have started our process to take costs out of our business.”

In June, Cazoo announced 750 job cuts and a hasty retreat from the new car leasing business. At the time the company blamed a gloomy economic outlook and high inflation eating into its customers’ disposable incomes.

Cazoo’s share price has lost 95pc of its value since it listed in New York last August.

DMGT, the former holding company of the Daily Mail controlled by Lord Rothermere, was an early investor in Cazoo and its stake was used by Lord Rothermere to help finance his deal to take the newspaper private. However, DMGT shareholders were told they would receive Cazoo shares as part of the deal in February, when they where $4.24 each. The stock had fallen to $1.01 by June when they finally received them and has since slumped to 48 cents, valuing Cazoo at $368m (£302m).