Cazoo car sales DOUBLE but margins shrink as demand for used vehicles continues to outstrip supply
- Number of cars sold jumped by almost 10,000 to 19,713 in first three months
- Gross profits per car sold declined by 19% to £124; group gross profit halved
- It said its inventory hit a record of around 6,500 vehicles at the end of March
Online car dealership Cazoo doubled the number of cars it sold in the first quarter as it managed to source and refurbish more vehicles to meet soaring demand.
The company, which buys used cars and reconditions them using its refurbishment centres to then sell them online through its website, said it sold almost 10,000 more vehicles than last year – a total of 19,713.
That has helped push revenues 159 per cent higher to £295million, from £114million a year ago.
However, gross profits per car sold (GPU) in the UK declined by 19 per cent to £124, as limited supply continued to be outstripped by demand, with overall gross profit halving to £2million.
In demand: Cazoo saw revenues jump 159% to £295m in the first quarter
Demand for used cars has risen so much that Cazoo last year was unable to refurbish used cars fast enough for sale.
The company, which counts the Daily Mail and This is Money owner DMGT among its investors, said its inventory hit a record of around 6,500 vehicles at the end of March.
And it expects a ‘significant improvement’ in its gross profits per car in the second quarter, with the company’s aim for GPU to be £900 by the end of the year.
Founder and chief executive Alex Chesterman, the entrepreneur behind Zoopla and Lovefilm, said the sharp increase in sales comes despite a ‘rapidly changing macroeconomic backdrop’.
‘While we are very mindful of the wider macroeconomic uncertainties, we remain laser focused on the execution of our strategy as we continue to make progress against our previously detailed expectations for the year.
‘We expect any macro headwinds to be transitory in nature and remain extremely excited by the enormous market opportunity for Cazoo and are very confident in achieving our long-term growth and margin targets.’
Despite the reassurances, Cazoo shares tumbled 6.3 per cent to $1.50 shortly after the open in New York.
The company said it has continued to invest in the expansion of its operations in France and Germany and preparing for launches in Spain and Italy this summer.
It has also continued to raise funds to keep growing, issuing $630million of convertible notes to an investor group led by Viking Global Investors.
And it secured €50million in asset-backed finance for its subscription business in France and Germany.
Heavy investments mean Cazoo still has to turn a profit – last year pre-tax losses widened to £549million, from £100million in 2020. It expects to become profitable next year.