The British group, which is listed in America, has said it plans to slash its workforce by about 15% and also slow down on hiring new staff under a major cost-savings drive, as it warned over recession fears and consumer cut backs.
Cazoo said the roles will be cut across its 4,000-strong UK employee base, as well as in Germany.
It is also shutting some customer service and vehicle preparation sites in the UK.
The firm said it would shut two of its 10 vehicle preparation sites in the UK and close one of its two customer support centres, with the site in Leeds set to go, alongside plans to scale back its centre in Southampton.
The London-headquartered group has around 5,000 staff in total.
It said the “business realignment” was needed to protect profits in the face of tougher economic times.
But it also comes as firms such as Cazoo have seen online car sales dwindle as pandemic restrictions have been lifted, with used car dealer Carzam collapsing late last week.
Cazoo said: “The company is not immune to the rapid shift in the global economy and the possibility of a recession in the coming months.
“As a result, management’s expectations for the full year are now more cautious, reflecting the weaker and uncertain external environment.”
Cazoo founder and chief executive Alex Chesterman added: “The combination of rising inflation and interest rates with supply chain issues caused by the pandemic and war has driven up the cost of living and hit consumer confidence.
“This perfect storm has placed cash conservation top of mind for the company, ahead of growth.”
The firm said it will also lower marketing spend and put back some planned investment projects, among other cost cutting measures.
And the group said it will no longer offer its subscription service to new customers from the end of June.
Cazoo lowered its sales outlook for the year ahead in light of the more difficult trading. It now expects to sell between 70,000 and 80,000 vehicles in the full year, down from previous guidance, but this would still be up to 130% higher year-on-year.
Revenues of between £1.4 billion and £1.5 billion are now expected for the year, and cash flow is likely to break even in the UK by the end of 2023.
The company was founded two and a half years ago by prolific tech entrepreneur Mr Chesterman.
It was floated on the stock market in New York last August in a listing initially valuing it at around £5 billion.
Cazoo offers online sales and delivery of used vehicles in the UK and continental Europe.
It has sold more than 70,000 cars since launch, making it one of the largest used car retailers in the UK with revenues of over £665 million last year.