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A Virginia based chain of used car dealerships is closing half its stores in the country, including one it recently opened in Clearwater, and reducing its workforce by about 30%.
CarLotz, which sells vehicles on consignment, announced that it is closing 11 stores nationwide and backed out on leases to open an additional three as it looks to cut costs, or as a press release says, “focus on a path to profitability.”
The stores closed June 21.
The closures, the company says in a statement, should reduce losses by about $13 million and create about $10 million in operating capital as inventory is “liquidated based on anticipated sale prices at these locations.” About $600,000 will go toward severance payments.
The company opened its first dealership in Midlothian, Virginia., a Richmond suburb, in 2011, just a few miles from where industry giant CarMax got its start. It was founded by former investment banker Michael Bor along with two partners. Bor was replaced as CEO in March by Lev Peker.
The goal since the start was to sell used vehicles brought in on consignment and previously leased by corporations rather than finding inventory from more traditional sources like auto auctions. The idea was that by sourcing cars and trucks differently, customers were able to buy at “prices that are, on average, below those of traditional dealers.”
But industry analysts long saw this approach as a marketing tool, especially since once the customer reached the dealership the experience was often the same as at a conventional dealership and that the price sellers wanted for their vehicles wasn’t always in line with market values.
In addition to Clearwater, the company also closed the dealership on Merritt Island leaving its only remaining Florida location in Tampa.
Just 15 months ago, Bor, when announcing the Clearwater store, celebrated that Florida would be the only state outside of Virginia with three CarLotz dealerships.
“In some cases, we open hubs to reach a new market and in other cases to increase capacity, but with our Clearwater opening and the unique dynamics of the greater Tampa – St. Petersburg market, this hub helps us in both respects.”
CarLotz, whose first quarter revenue was up 11% from 2021 to $63 million, has 11 dealerships remaining nationwide.
In addition to Clearwater, CarLotz is closing stores in the following cities:
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