BMW, Motorpoint, and Car Gurus Show Interest in Cazoo's Marketplace Amid Insolvency

Cazoo, the United Kingdom-based online car sales company, is set to officially file for bankruptcy on Tuesday, June 25, 2024. Founded in 2018 by Alex Chesterman and once valued at over £5 billion, the company sought temporary protection from creditors last week.

According to Sky News, insolvency practitioners from Teneo will be formally appointed shortly after Cazoo's bankruptcy filing. The crisis at Cazoo has already resulted in the loss of jobs for more than 700 people, and administrators plan to retain some staff to manage the remaining marketplace model.

Sources in the automotive industry indicate that entering bankruptcy will allow Teneo to focus on sales. The marketplace model has attracted interest from various potential buyers including BMW, Motorpoint, and Car Gurus. "Our marketplace model, which allows consumers to both buy and sell cars, has seen our inventory grow to over 15,000 vehicles, making it the only online vehicle marketplace where consumers can trade under a single brand," said an official statement from the company.

On Monday, the group's wholesale arm was acquired by G3, another player in the industry. Constellation Automotive, owner of Cazoo's competitor Cinch, also purchased several assets from the faltering New York-listed company.

Cazoo raised funds in several rounds at increasingly high valuations before making its stock market debut in 2021, leading investors to value the company at $8 billion. The company spent tens of millions of pounds on sponsorship deals in football, snooker, and darts in a rapid bid to gain market share.

Among the assets sold in recent weeks is its vehicle fleet, which sources say was achieved at higher-than-expected values, reflecting a current shortage of used cars in the market.

Last week, Cazoo commented, "Our new marketplace model is revenue-generating and performing above expectations, with interest from nearly 100 car dealers including many well-known names wishing to trade on the Cazoo platform." The company also noted, "We have successfully restructured and significantly reduced the cash burn of the group."

Teneo has declined to comment on the matter.

The bankruptcy of Cazoo follows further restructuring of its balance sheet and operations. The company's founder, Chesterman, left the business a few months ago following a balance sheet restructuring that converted hundreds of millions of dollars of debt into equity.