Carwow, the largest online new car sales portal in the UK, Germany and Spain, has cut about a fifth of its staff to preserve cash, as economic concerns slow orders for vehicles and tightening markets make fundraising more difficult.
Roughly 70 staff will be released across the three countries as the business, whose investors include Volvo Cars, cuts back, Carwow told employees on Monday.
The move comes as technology companies across the world from Facebook to Netflix have been making swingeing job cuts, while the car industry has been facing a sales slump caused by chaos in the global supply chain.
Long waiting times for new cars, which can run to more than a year, mean consumers with economic concerns are more likely to cancel previous car orders, while new vehicle interest is also declining, Carwow founder James Hind told the Financial Times.
Hind said the company had raised about £57mn this year, giving it “ample cash and ample to get to profitability . . . even assuming that next year is a bad year for supply”.
Tightening market conditions since the start of the year following Russia’s invasion of Ukraine and political turmoil in the UK have made it significantly harder for start-ups to raise funding, or forced businesses to accept more onerous terms in order to secure backing.
“There is always money out there, it’s how much you are prepared to give in return for it,” Hind said.
Automotive start-up businesses including Britishvolt, a battery company that wants to build a “gigafactory” in Northumberland, and electric van group Arrival have found efforts to raise money made harder, leading both groups to warn about their viability if they cannot secure fresh funds.
Carwow was launched in 2009 as an aggregator of reviews but has morphed into offering an online sales platform, a marketplace and producing its own online videos.
Volvo invested in the business earlier this year, with the aim of improving its online offering and learning from Carwow’s viral videos.
Car sales have been hit by shortages of chips and other parts, with UK car sales still a third below pre-pandemic levels, and even most mainstream brands having long waiting lists.
While carmakers are sitting on long order banks as a result of the chip shortages, auto groups have warned that inflation and economic shocks are expected to hit demand from next year.