By Desiree Homer
The Online Used Vehicle Seller Positions for Growth in an Online Market
The online seller of used vehicles, Shift Technologies, announced last Monday that it plans to move forward this year with its reverse merger with Insurance Acquisition Corp. It’s a strategic move that will allow Shift to position itself in a post-pandemic, digital dominant environment. And it’s proving to be one of many restructuring moves dealers are witnessing within the industry these days. It’s not that they know something dealer owners don’t. The digital movement has arrived, and those primed to embrace its every facet moving forward will continue to grow.
The Shift Technologies Reverse Merger Details
The merger is set to complete later this year between Shift and a special purpose acquisition company (SPAC), Insurance Acquisition Corp. Together, the union expects to leverage $185 million via the sales of shares, according to the official statement. Using the SPAC means Shift can go public without having to coordinate with regulators and wade through time-consuming paperwork submissions. The move ultimately would potentially value the company at $730 million, on a pro forma basis.
Just Another Sign the Digital Auto Sales Movement Is Here to Stay
Shift Technologies is a popular used-car site that offers vehicle buyers a type of concierge service that brings vehicles to the consumer directly and sees the process through to financing and final paperwork. Much like the Carvana model, Shift recognized the success of and need for the virtual buying option during these last few COVID-impacted months. The statement said the company sees a healthy appetite for stock offerings, from any company that is laser-focused on online models. One of Shift’s chief rivals, Vroom, Inc., posted a doubling of its debut stock prices.
Going Back to the Old Way May No Longer Be an Option
Leading industry experts warn that the old way of selling cars may be a permanent fixture in the rearview mirror. Dealers have been resilient in adapting to the pandemic conditions. But how they develop their long-term strategies in a virtual environment will be the key to their success. In a recent episode of the Dealer News Today podcast series, Dave Cantin talks to Bernie Moreno, automotive veteran, and industry legend, about the digital way of doing business. Moreno predicts, “there is a perfect storm coming,” and discusses what the landscape might look like when the remote sales model becomes the only way.
Dealers have revamped their efforts to survive the economic shutdown. But now, it’s time to develop more permanent strategies for the remote car buying long term. Even as showrooms open their doors, it’s evident that customers continue to use and sometimes prefer the online interaction to the traditional in-person one. This recent Shift Technologies announcement is one of many headlines that suggest, those companies with strategic virtual solutions will be prepared for the potential 100% digital market. Now is the time to evaluate current tools and partnerships and carve out official plans for growth in the post-pandemic industry.