Online used-car vendors have run out of road

Cazoo

13/06/2022 10:04

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Aimee Donnellan
    LONDON, June 13 (Reuters Breakingviews) - Shares in Carvana
and Cazoo have lost 80% or more this year. That’s a nasty
collision with reality for loss-making companies once worth
eight times their sales. With debt costs rising and an economic
slowdown threatening demand, there’s no way back.
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    CONTEXT NEWS
    European online car retailer Cazoo said on June 7 it would
cut its workforce by about 15% to preserve cash amid what Chief
Executive Alex Chesterman described as a “perfect storm” of
rising inflation and interest rates, and supply-chain problems.
    The job cuts will impact about 750 roles. Cazoo employs more
than 3,500 people across the UK, Germany, France and Portugal. 
    Despite the cuts, Cazoo said it expects sales to double to
between 70,000 and 80,000 units in 2022 from a year earlier. It
also said its annual revenue would double to between 1.4 billion
pounds and 1.5 billion pounds.
    In May, U.S. rival Carvana said it would lay off about 2,500
employees, or 12% of its workforce, and cut marketing and
capital spending.
    Shares in Cazoo are down 81% since the beginning of the
year, while shares in Carvana are down 90%.

 (Editing by Ed Cropley and Streisand Neto)
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