Buying a car can be both exciting and stressful. If you know the make and model you want, heading to the dealership isn't too much of a hassle, but if you're scheduling test drives for different options, it can be overwhelming, to say the least. There's also the choice between new or used vehicles, financing or leasing, and other small but significant decisions about features and upgrades.
Thankfully most sales associates at the dealership are well-equipped to address your questions and help you make the right choice. But your dealership options may become more limited, as one popular dealer just announced it will be shuttering half of its locations by July 8. Read on to find out which locations are closing across the U.S.
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The automotive industry has had a rough go of it recently.
AlpakaVideo / ShutterstockLike so many other sectors of the economy, the automotive industry has been shaken up by the COVID-19 pandemic. According to Kelley Blue Book, the market is currently characterized by high prices, low inventory, and few incentives, which is further compounded by those tedious supply chain issues we keep hearing about. In particular, an ongoing microchip shortage has prevented manufacturers from being able to produce enough new cars to meet demand, and new COVID-19 lockdowns in Asia and the war in Ukraine have delayed other car parts.
In light of this, many car buyers have opted to shop for used vehicles. But thanks to good old supply and demand, prices for pre-owned vehicles have now skyrocketed. And one nationwide car dealership has been directly affected by this shift, now opting to close half of its locations.
Buying used? Make sure the dealership you're headed to is still in operation.
LMPark Photos / ShutterstockIf you're in the market for a used car, you may have to look somewhere other than CarLotz. According to a press release from the used car and consignment dealer, 11 locations will be closed across the U.S., which is nearly half of CarLotz's total locations.
The dealership stores, also referred to as "hubs," began closing down on June 21, and closing activity will be finished by July 8, CarLotz confirmed in the press release. Closures will also result in a 25 to 30 percent reduction in the company's workforce.
“While decisions that impact our teammates are not taken lightly and are not easy, we believe the hub closures are a necessary step to help improve the company’s financial performance," Lev Peker, CEO of CarLotz, said in a statement. "We greatly appreciate all our teammates have done for CarLotz and are committed to help support them through this transition."
Locations will be closed in eight states.
Shutterstock/GOLFXHaving to close locations is never a good sign, but CarLotz has also chosen not to open new locations it had on the docket, nixing plans for three dealerships with newly-executed leases.
The existing hubs that are closing include those in Lilburn, Georgia; Bakersfield, California; Clearwater, Florida; Highland Park, Illinois; Merritt Island, Florida; Mobile, Alabama; Madison, Tennessee; Plano, Texas; San Antonio, Texas; Lynwood, Washington; and O'Fallon, Illinois.
CarLotz's four locations in Virginia, where the company is based, won't be affected, as reported by the Business Journals.
CarLotz has been impacted by the volatile used car market.
Mr Doomits / ShutterstockThe primary reason for the massive closures is due to the nature of the auto resale market, the company claimed. With so much demand for used cars, CarLotz emphasized the challenges associated with acquiring inventory.
“Over the last twelve months, our sourcing has been challenged. Growing our mix of consumer sourced vehicles is a priority to complement our retail remarketing sourcing channel and reduce our reliance on auctions," Peker said in a statement. "We believe the closures should allow us to improve sourcing across a smaller hub base and focus on the productivity and efficiency of the remaining hubs."
CarLotz went public in 2021, as reported by the Business Journals. At that time, the company's market cap was roughly $1.2 billion, but things have taken a drastic turn since then. In 2021, the company reported almost $40 million in losses, and in just the first quarter of 2022, losses totaled $24 million.
The company anticipates that closing the locations will allow for a clearer focus on "future profitable growth," the press release stated, and CarLotz estimates that the closures will reduce operational losses by $12 to $13 million. "We also believe this is the first step to building a stronger CarLotz, enhancing cash preservation, and creating a path to profitability," Peker added.
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