Shift Technologies, Inc., an ecommerce platform for buying and selling used cars, has agreed to merge with CarLotz, a used vehicle consignment business, in a stock-for-stock merger.
The merger will bring together the most profitable assets from each company, consolidating Shift’s proprietary acquisition engine, technology platform, and strong presence on the West Coast with CarLotz’s consignment relationships and prime retail locations in the mid-Atlantic region.
Upon closing, the go-forward business plan is expected to be fully funded to profitability by the cash position of the combined company. It is estimated to have about $125 million in cash if the merger closes at the end of the year.
New Business Plan
Shift also announced an updated business plan expected to allow it to reach positive unit economics in 2023 and company-wide profitability in 2024.
Key aspects of the plan include focusing most sales through Shift’s most profitable online checkout channel, which allows consumers to purchase a vehicle online, sight unseen for pickup or delivery, and temporarily eliminate test drives.
Given current market dynamics, Shift is optimizing inventory mix and assortment to favor value vehicles, which Shift defines as older than eight years or having been driven 80,000 miles. These operational changes will also result in a reduction of workforce across the business and a close look at Shift’s physical footprint.
“Increasingly, we’ve seen that many consumers opt for a true e-commerce offering, where they can purchase the vehicle without any in-person element,” said Jeff Clementz, Shift’s president and incoming CEO. “Focusing on this sales channel not only caters to consumer demand but is also far more profitable in terms of unit economics. I’m confident that the team we have in place is well positioned to execute on this revised business strategy, and I look forward to bringing the Shift and CarLotz teams together once we complete the merger later this year.”
Shift’s Board of Directors also appointed current Shift President Jeff Clementz as CEO effective Sept. 1. After nearly nine years in the role of CEO, co-founder George Arison will be stepping down and remaining in his role of Chairman of the Board of Directors. Clementz will continue to serve as CEO of Shift following its merger with CarLotz.