How is Shift dealing with COVID-19 Virus?ĭespite the ongoing Corvid-19 pandemic, Shift still expects to see growth this year.
Since around two thirds of buyers choose financing on their purchases, this is a major source of income for Shift – about $15m on top of the $30m they make from car sale margins. Buyers can then receive an estimate of monthly repayments and interest rates and customize their orders accordingly.įor Shift, this means a commission of between $200 and $700 depending on the bank. The entire process for applying for a loan is automated, thus reducing administrative costs and increasing profit margins substantially.īuyers send all relevant information to Shift digitally, and the company will prequalify them for a loan. Here’s how Shift made 7,000 loans last year and earned $200-$700 for each oneĪ third of Shift’s revenue comes from loans, which it does in partnership with a dozen banks. That compares to around $600 billion in new cars. That’s a total revenue of near $200 million, of which between 20 and 30% is profit.ĭespite recession being all but imminent, the industry as a whole still expects that 45 million used cars will be sold in the US in 2020, representing around $750 billion. In 2019 alone, Shift managed to sell 11,500 used cars at an average price of $17,000. The added convenience enables them to make a margin averaging 15%. This differs from most dealers, since sellers generally get a better price, while buyers get to have the car brought to them for a test-run before they decide whether to make a commitment.
While this means a smaller margin for Shift, a third of their profits come from additional offers, such as financing, warranty, and other attached products and services. This usually turns out to be higher than the value sellers would get from a conventional trade-in and very close to what they’d be able to get by selling a used vehicle themselves. How Shift makes money with built-in 15% marginįor sellers, Shift uses a cutting-edge algorithm, which draws from numerous data points, to determine the value of the car. Nathan Latka sat down and spoke to Shift CEO George Arison this week to discuss revenue, margins, virus effects, and more: They’ll also handle the paperwork needed for financing the whole process. It also acts as a personal concierge service by delivering used cars between sellers and buyers, including for test runs.įor sellers, they provide instant online quotes and have qualified mechanics for inspecting the state of the vehicle. Shift provides an online portal for buying, selling, trading in, and financing cars.įounded by George Arison, it gives people a convenient way to find and purchase used vehicles across a wide variety of categories.
The automotive industry is no exception.Įstablished in 2013 and selling its first car in 2014, Shift is one of the most innovative and successful players in the vertical. With more industries moving to online platforms, buying, selling, and renting online is now the new norm in many sectors. Even with virus, Shift expects to sell 16,000 cars this year.Shift makes 15%-20% margin buying/selling cars, $30m in revenue.Founded in 2013, Shift provides an online platform for car buyers and sellers.
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