Last week, I reported on a handful of major announcements from online used-vehicle retailer Shift Technologies. After facing market challenges, the company is getting a new CEO next month and cutting its work force by 60 percent through the rest of the year. Shift also plans to merge with CarLotz, a similarly troubled company in the used-vehicle consignment space.
Why is Shift taking these steps? Its executives said such a realignment is necessary to get the retailer on track to profitability. Current Shift CEO George Arison — who will be succeeded in that role by Shift President Jeff Clementz on Sept. 1 — said it has become clear that the retailer's former business plan would be hard to finance given the changes happening in the used-vehicle market environment at the moment.
So Shift updated that plan in part to focus most sales through its online checkout channel, which enables consumers to purchase a vehicle online, sight unseen, for pickup or delivery. Of note: Shift said it is temporarily eliminating test drives.
The updated plan also contains Shift's response to current market dynamics: It will change its inventory mix to favor what it calls value vehicles, or cars and trucks older than 8 years or those with mileages of 80,000 miles or more. That's not too surprising, given that leaders of several public dealership groups said last month they are seeing an uptick in consumer demand for more affordable value-line vehicles.
Shift's online competitors have been affected by the changing market, too. Like Carvana Co., Shift will try to lower its cash burn. Like Vroom, Shift will try to reduce its sales volume.
We'll continue to bring readers coverage of Shift, its updated operations and the pending merger with CarLotz.
In the meantime, I'd like to hear from readers who might also be experiencing shifts in the used-vehicle market. Are customers seeking more affordable cars? If you're a dealer, are you considering changing your used-vehicle sales strategy in response to market conditions? Let me know by sending an email to [email protected]