(Bloomberg) -- Cazoo Ltd (NYSE:CZOO), the British online used car platform backed by some of the world’s best-known investors, said it’s slashing hundreds of jobs due to the rising prospect of a UK recession.
The company will cut its existing workforce by 15%, halt new hires and delay investment projects, it said Tuesday. A combination of high inflation, supply-chain disruption and rising interest rates have dented consumer confidence, according to the company, leading the firm to abandon plans for accelerating growth.
“This perfect storm has placed cash conservation top of mind for the company,” Alex Chesterman, chief executive officer of Cazoo and founder of Zoopla, a property website.
Cazoo currently employs about 3,500 staff.
Cazoo’s decision adds to signs for the automotive sector girding for an economic downturn. Elon Musk last week said Tesla Inc. will cut 10% of its salaried staff.
The UK is on the front line of a wave of inflation washing over major economies. Price rises hit a 40-year high in April, eating into consumers’ spending power and adding to warning signs the economy could tip into recession. With confidence at a low ebb, increasingly cash-strapped households are less likely to buy big-ticket items like cars.
Cazoo, founded by serial internet entrepreneur Chesterman, buys and restores used cars before selling them online and delivering them directly to consumers’ homes. The firm expects to sell as many as 80,000 cars in 2022, generating revenues of as much as £1.5 billion pounds ($1.87 billion).
The company was planning for rapid growth over coming years, hoping to hit sales of 210,000 vehicles in the UK in 2024, a benchmark that would make it one of the largest automotive dealers in the country.
The company has also made moves to expand in continental Europe, buying brumbrum in Italy and Swipcar in Spain to add to its small car-subscription services acquired in the UK, France and Germany.
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