Like most auto retailers, CarLotz saw solid performance in January and February and was gearing up for what was going to be its best quarter in company history. Then the coronavirus pandemic hit in March and created two separate situations for the company — one for sales and another for sourcing.
On the sales side, there was a dramatic drop in March and April, followed by a swift rise in May and throughout the summer. On the sourcing side, it was a longer-term disruption, Bor said. With assembly plants shut down and moratoriums on vehicle repossessions, "it muddled the supply chain quite a bit."
Many of CarLotz's clients weren't getting new inventory to swap out with the old, and the company's inventory dropped more than 40 percent from March until September. All the while, there was a backlog of inventory forming that needed to get sold, Bor said. In September, CarLotz was expecting to get some of that built-up inventory, but not as much as it did. It now has a record 2,000 vehicles to sell vs. pre-pandemic levels of about 1,300.
In investor documents, CarLotz put the e-commerce penetration in auto retail at just 1 percent, compared with 9 percent for groceries, 27 percent for appliances and 32 percent for apparel. And with used vehicles, Bor sees a long runway. Even in difficult economic times, people still need cars, Bor reasons, noting that in hard-hit years such as 2001 and 2008 sales stayed well above 30 million vehicles.
"So as long as the volume is there, we're good," he said. "And the volume seems to always be there in this market."