Everybody Wants To Be A Used Car Billionaire
Competition to sell used cars online is great for consumers. But will the financial returns match the high valuations of Carvana, Cazoo et al?
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Photo: Bloomberg
What’s the fastest way to get rich nowadays? Non-fungible token artworks might work for some but huge fortunes are also being made in the more humdrum business of used cars.
British start-up Cazoo Ltd. began selling second-hand cars online in December 2019. It handed over just 12,000 vehicles last year and its gross profit margin — the money left over after deducting the cost of acquiring vehicles and preparing them for sale — was negative 2%. Yet the deal it announced last month to go public by merging with Ajax I, a special purpose acquisition company, values it at about $7 billion, excluding its cash. Founder and Chief Executive Officer Alex Chesterman will own a 25% stake after the transaction, so he’s poised to become a paper billionaire.