Investors in online car dealer Cazoo are still having to wait for share price growth despite its announcement this month that its gross profit on every car sold is almost four times higher than it was achieving during the first half of 2022.
Its shares are still trading at around $1.2 and haven’t climbed above the $2 per share mark since May. At the peak in February 2021, soon after London-based Cazoo’s listing on the New York Stock Exchange, its shares traded at more than 200 times the current value at $271.6 per share.
The confidence of many investors suffered when the automotive e-commerce group, which aims to disrupt used car retailing through online purchase and nationwide home delivery, announced huge losses which drove it to switch focus from brand-building and fast growth to trying to find profitabilty.
In its most recent update, Cazoo’s chief executive Paul Whitehead said: “Over the past 3.5 years we have demonstrated that we can sell retail cars online at scale. Customers have purchased over 130,000 retail cars on our website since 2019.”
Its UK network of Cazoo customer handover centres has been slashed from 22 sites to 7, while its number of vehicle preparation centres was slashed from 8 to 3, and it has one wholesale site. Whitehead said refurbishment capacity is now 85,000 cars per year, but mothballed sites can be added as needed in the future.
Its fleet of vehicle transporters, ranging from multi-car carriers to single vehicle transporters, has reduced from 250 to 190 trucks.
“In the current challenging economic environment we are pleased with our decision to pivot from fast growth to full focus on unit economics and preserving cash,” he said.
Retail car sales volume has fallen 22% year-on-year to 22,438 units during H1 2023, and Cazoo’s revenue of £419 million is 28% down versus H1 2022.
Whitehead said: “We are now a leaner and more efficient organisation with a path to deliver better profitability, right-sized for today, and with a view on returning to growth in the future.”