A sevenfold surge in sales has given Cazoo’s founder Alex Chesterman confidence that the used car website will make $1 billion revenues this year as it gears up to close its blank-cheque US listing this month.
The company recorded a 605 per cent rise in second-quarter sales to £141 million compared with £20 million last year. Cazoo said it had sold 10,692 cars during the period, five times as many as the 2,022 sold last year.
It recorded £8 million of gross profit during the quarter after quadrupling the margin it makes per car to £460, which it said was the result of “continued improvements across our buying and operations”.
“We remain on track to achieve revenues approaching $1 billion in 2021 and expect operational efficiencies to continue to drive further gross margin improvements”, Chesterman, 51, said.
Cazoo is reversing into a US-listed special purpose acquisition company (Spac) called Ajax I in a move that is expected to value the business at $7 billion, more than double the $2.6 billion valuation it secured in a private funding round last October.
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Chesterman, the technology mogul who also founded LoveFilm and Zoopla, said the four-year-old business had received confirmation from the US Securities and Exchange Commission for the listing last week.
The deal with Ajax I, founded by Dan Och, the billionaire investor, and backed by Kevin Systrom, co-founder of Instagram, was expected to close in the last week of this month.
Daily Mail & General Trust, which owns a 20 per cent stake in Cazoo, will make £900 million on its investment. The owner of the Daily Mail invested £117 million in Cazoo, which Chesterman describes as “the Amazon of the used car market”. The profit is expected to help finance Lord Rothermere’s plans to take DMGT private.
Cazoo said that it had benefited from its decision to start buying cars directly from owners and charging for home delivery of vehicles.
The launch of its subscription service, which gives customers the option to buy a new or used car, insurance, maintenance, servicing and tax for a flat monthly fee has also helped to drive sales.
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The group is planning to launch in mainland Europe this year and said that it had started to build teams in France and Germany and was purchasing and reconditioning cars to accelerate its rollout plans.
Cazoo hopes to disrupt the used car market, which it reckons is worth more than £50 billion a year, by promising to deliver a vehicle to customers’ homes in a branded van and give them a week to send it back for a full refund.
Only 2 per cent of cars are bought online at present.
