Cazoo, the online motor retailer, has reported UK revenues of £347m from Q3 trading, which is a 103% increase versus Q3 2021.
Its retail car sales volume doubled year-on-year to 18,889 units, and retail GPU (gross profit per unit) strengthened to £488 from Q2’s £309 a result of continued efficiency gains across buying, reconditioning and product.
Cazoo sold 3,105 more used cars in the UK during Q3 than it had in Q2.
Chief executive Alex Chesterman said he was pleased with the strong growth against a tough UK macroeconomic backdrop and in a used car market which saw an overall decline due to the economic climate.
“This very strong performance shows that consumers continue to embrace our proposition and the shift to online car buying continues to accelerate. In less than 3 years since launch, we have already become one of the largest used car retailers in the UK, having now sold almost 100,000 vehicles entirely online, and remain incredibly excited about our ability to capture a 5% or greater share of the £100bn UK used car market,” Chesterman added.
Cost of sales was down more than 30% reduction versus Q2 2022 as “a result of our stringent cost focus in combination with continued operating leverage. We remain laser-focused on further improving our unit economics as we drive towards profitability, whilst remaining one of the fastest growing used car retailers in the UK”.
Cazoo is retrenching from mainland Europe, where it had acquired or launched businesses, to focus on the UK and to stem its losses.
It warned of job cuts in the summer and closed a preparation site.
He said the positive momentum seen in Cazoo’s UK Retail GPU and UK SG&A (selling, general and administrative expenses) per retail unit over the period and his expectations for continued improvement quarter on quarter gives Cazoo strong confidence in its plan to reach profitability without the need for additional external funding.
Some 40% of Cazoo’s car stock was sourced direct from consumers during Q3 through its direct consumer car buying channel.
Chesterman added: “Our balance sheet remains very strong with over £450m of cash and self-funded inventory at the end of September. Our business realignment plan announced in June, together with our decision in September to withdraw from mainland Europe, has ensured that we have a plan to reach profitability without requiring further external funding.
“Our strong growth and momentum in Q3 and our continued focus on cash preservation gives us great confidence in our ability to become the largest and most profitable used car retailer in the UK over time.”
Cazoo expects to aintain its growth rate of more than 100% year-on-year throughQ4, along with improving GPU.
“The UK used car market is the largest in Europe, worth over £100bn annually. Digital penetration remains materially below almost all other retail sectors and we believe that our market leading platform, brand, team and infrastructure position us well to realise our ambition of achieving a 5% or greater share of the UK used car market over time.”