Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Used Car Disruptor Joining Carvana, Vroom in Bid to Move Industry Online

Stock MarketsNov 14, 2020 08:07AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Christiana Sciaudone -- We sell clothes online on consignment, so why not cars? Enter CarLotz, among the newest disruptors in the digital used car world, which has seen demand boom in times of Covid-19.

The fast-growing, already nearly trillion-dollar market for used cars is a fragmented one, with thousands of dealers of all sizes, and the top 100 representing just 6% of the total. Richmond, Virginia-based CarLotz is seeing a wealth of opportunity to fast-forward the industry into the digital age -- though it is also betting on physical locations. It is poised to go public via a reverse merger with a special purpose acquisition company to fund its ambitious growth plans. 

CarLotz says it's unique in selling vehicles on consignment online from individuals who might previously have used Craigslist, corporations and auctions. 

"We're the only guys who are disrupting the whole supply chain," said Chief Executive Officer Michael Bor in a video interview. Expectations for future performance are high, and CarLotz is not alone in its mission.

The company sees 2020's estimated revenue of $110 million booming to as much as $1.7 billion in 2023, and unit sales jumping from just over 6,000 to over 80,000 in that time period. Annual profit, estimated at $12 million in 2020, could rise to as much as $250 million in 2023, the company said in a statement. 

While that may seem aggressive, rival Carvana’s first reported revenue after going public in 2017 totaled $159 million. In its most recent quarterly report, Carvana Co (NYSE:CVNA) reported sales of $1.54 billion.

“It does sound like a big dollar amount but it's consistent with what we're seeing is possible in this sector,” Bor said. 

CarLotz's reverse merger with Acamar Partners's Acamar Partners Acquisition Corp Class A (NASDAQ:ACAM), and a private investment in public equity, or PIPE, for a total of $436 million, minus expenses, will put $321 million on its balance sheet. That will help CarLotz expand from eight locations in five states -- it intends to open three to four new locations each quarter for the next several years.  

The industry's jump in sales will have to overcome pressure on individual car prices. Rival Vroom (NASDAQ:VRM) saw increased demand in the third quarter, with ecommerce unit sales up 59% and overall unit sales rising 15%. The company reported results earlier this week. Despite the good news, Vroom shares tumbled 13% because the average online selling price of its vehicles tumbled in the third quarter to $24,248 from $31,370. 

Carvana, another competitor, also saw demand increase, with retail units sold in the third quarter up 39% from the same period in 2019. But Carvana also saw a dip in the average selling price of retail units in the third quarter, to $20,013 from $20,059. 

CarLotz's growth plan assumes a slight increase in the average selling price, from $16,054 to $17,250 between 2020 and 2022, representing a 3.7% compound annual growth rate. That average is 7% lower than the increase recorded between 2017 and 2019, according to CarLotz.

CarLotz nets a better price for its sellers with professional merchandizing, Bor said. In fact, CarLotz’s corporate vehicle sourcing partners earn on average about $1,000 more through CarLotz than by selling at wholesale, according to a company presentation.  

The used car market has definite potential and CarLotz could be ready for take off. Looking at its competitors, however, shows these stories have very different endings. Carvana saw shares more than double in 2020. Vroom, however, which went public in June, saw a spike in shares in September, only to tumble more than 50% since then.

Despite a growing market, it's not necessarily an easy one.


Used Car Disruptor Joining Carvana, Vroom in Bid to Move Industry Online

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Junu Limbu
Junu Limbu Nov 14, 2020 10:22AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email