Motors.co.uk Poised to Acquire Struggling Car Marketplace Cazoo

Cazoo's brand and marketplace business are expected to be sold for a fraction of what the company spent on high-profile sports sponsorships, Sky News has learned.

Administrators for the British online car retailer Cazoo, once valued at over £5 billion, are nearing a deal to sell its marketplace division. Motors.co.uk, a privately-owned used car platform, is currently the leading contender to purchase Cazoo's brand and marketplace business.

Industry insiders suggest that the sale price will likely be significantly lower than the amount Cazoo invested in sports sponsorships to boost its brand awareness since its launch in 2018. Last month, Cazoo entered administration after failing to establish a sustainable business model despite undergoing a debt restructuring last year.

Teneo, the firm managing the administration, has already sold several of Cazoo's operations, resulting in hundreds of job losses. The company's wholesale arm was acquired by another industry player, G3, while Constellation Automotive, the owner of Cazoo's rival Cinch, also purchased several assets from the distressed company.

Founded by successful entrepreneur Alex Chesterman, known for creating the property portal Zoopla, Cazoo raised multiple rounds of funding at increasingly higher valuations before making its stock market debut in 2021. At that time, investors valued the company at $8 billion.

Cazoo invested tens of millions of pounds in sponsorship deals across football, snooker, and darts to capture market share. Recently, a source in the industry noted that Cazoo's shift to a platform model had resulted in its inventory rising to more than 15,000 cars. It is currently the only online vehicle marketplace where consumers can both buy and sell cars under a single brand.

Chesterman departed the business several months ago following a balance sheet restructuring that converted hundreds of millions of dollars of debt into equity. Last month, Cazoo stated: "Our new marketplace model, where consumers can both buy and sell cars, is revenue-generating and performing ahead of expectations with interest from almost 100 car dealers, including many household names wishing to trade on the Cazoo platform."

The company added that it had "successfully restructured and significantly reduced the cash burn of the group." Neither Motors.co.uk nor Teneo could be reached for comment.

The anticipated acquisition by Motors.co.uk underscores the challenges and volatility within the online car retail market, particularly for companies like Cazoo, which experienced rapid growth followed by a swift decline. As the situation unfolds, stakeholders and industry observers will be watching closely to see how the sale impacts the broader market and what the future holds for Cazoo under new ownership.