British online auto marketplace Cazoo has reported upbeat second quarter and first half 2023 financial results, months after completing its withdrawal from European businesses to concentrate exclusively on its U.K. home turf.
Commenting on the results in a Tuesday (Aug. 1) press release, Cazoo CEO Paul Whitehead said he was pleased with “the decisive and meaningful progress” the company had made across all areas of the business to “improve unit economics, optimize our fixed cost base and maximize our cash runway in the first six months of 2023.”
Whitehead added that the recent U.K. restructuring and winding down of its EU business “have rightsized the operational footprint and head count, optimizing the business for today, with a view to future growth.”
In terms of headline numbers, the used car retailer reported a 29% drop in vehicles sold between H1 2023 and H1 2022, sending revenue down 44% year over year (YoY) to £171 million (about $218 million).
On the upside, a focus on unit economics led to retail GPU surging 389% in the first half of the year, while gross profit jumped from £6 million to £23 million during that same period.
The company also reported holding a higher-than-expected cash reserve of £195 million as of June 30 this year. “Lower restructuring charges and lower EU exit costs helped us to preserve cash in the first half of the year and allow us to reiterate our expectations for the year-end cash of £110 million to £130 million,” Cazoo CFO Paul Woolf said.
Cazoo’s efforts to improve operational efficiencies, optimize fixed costs and strengthen its cash position have been part of a broader goal to achieve profitability in the coming years. And to accelerate that goal, the retailer plans to sell 40,000-50,000 U.K. retail units this year, while expecting full-year retail GPU to be around £1,500 by the end of 2023.
As PYMNTS reported in April, low-price trends caused by high interest rates and limited demand have dampened the once-booming European used car market, with used car transaction volume in the U.K., Europe’s largest used vehicle market, dropping 8.5% to about 6.8 million transactions in 2022, according to data from the Society of Motor Manufacturers and Traders (SMMT).
“The performance saw 640,179 fewer vehicles changing hands than in 2021 and remains -13.2% off 2019’s pre-pandemic total, as the squeeze on new car supply — primarily due to the global shortage of semiconductors — restricted stock entering the second-hand market,” the U.K. industry body said at the time.
Outside the U.K., rival businesses in mainland Europe have not been spared and companies like Amsterdam-headquartered marketplace operator CarNext have had to put in place belt-tightening measures to weather the economic storm.
As of February this year, the Dutch auto seller has axed its business-to-consumer (B2C) activity in several countries including Italy, Germany, France and the Netherlands to focus exclusively on sales to business-to-business (B2B) customers.
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