Online used-car dealer Shift Technologies is closing operations and filing for Chapter 11 bankruptcy, according to a company press release.
Founded in 2014, California-based Shift Technologies sold preowned vehicles throughout the U.S. via the internet. Like other online used-car dealers such as Carvana, the company faced considerable challenges during the COVID pandemic due to severe fluctuations in used-car demand and prices. Over the last two years, the retailer’s financial reports became increasingly dire as it faced significant losses and layoffs. In May of 2023, executives noted they were looking into “strategic alternatives” after sustaining a net loss of $48 million in the first quarter and $25.8 million in the second, year-over-year reductions of 74% and 79%, respectively.
In the months since then, the used-car dealer’s leadership team exhausted their list of options. Shift Technologies CEO Ayman Moussa noted the decision to file for bankruptcy “follows months of trying to raise capital and restructure the balance sheet to allow the Company to operate unencumbered in this challenging environment.” To support its eventual shutdown, the retailer will raise funds by auctioning off its inventory and other assets. Its two facilities, both located in California, have already closed, as has its website.
The collapse of Shift Technologies is all too familiar in the post-pandemic used-car market. Anticipating new vehicle shortages created by disrupted supply chains to continue well into 2023, retailers purchased a surplus of inventories in 2022 but found themselves straddled with debt and low demand when OEM production resumed earlier than expected. However, while many retailers have been forced to take extreme measures to avoid shutdowns and bankruptcies throughout the year, the coming months may provide some much-needed financial relief to the sector as the United Auto Workers strike takes its toll on U.S. manufacturing, provided struggling businesses can survive for a while longer.