May 26, 2022

Used car e-commerce platform Shift acquired some of its technology from competitor Fair Technologies, turning Shift into the Amazon of the used car marketplace, a platform that displays the company’s own inventory as well as third-party offerings from dealers.

The deal is a nod to the online automotive marketplace, where even selling used cars requires a flawless user experience. Rising inflation and a supply chain, already interrupted by the pandemic and now suffering even more from Russia’s war in Ukraine, have led to a decline in new car purchases, meaning there are fewer used cars on the market.

However, the demand for cars has not decreased, which has led to a sharp increase in prices for used cars. From 2020 to 2021, prices for the Shift platform have increased by about 40%, from about $16,400 to an average retail price of about $23,000, according to Shift co-founder and CEO George Arison. Overall, used car prices have risen by about 33% compared to last year. According to car gurusI

“In the first quarter, we are starting to see the usual decline in retail inventory prices, so we expect 2022 to be more like 2019 in terms of normal depreciation patterns, but we expect prices to recover. Don’t expect. To start walking. Where were they in 2019,” Arison told gaming-updates, noting that the average price of cars only rose 17.5% from 2021 to 2022, but these cars are on average a year or two more than previous ones. Year. “It’s really difficult because people who thought they could buy a car for $450 a month are now being asked to buy the same car for $600 a month. Also, you have a higher interest rate because interest rates are rising.”

As a result, the average consumer is smarter than ever and yearning for a site that can help them find the best deal at the best price with a lot of flexibility. Companies that do not lower UX will not survive as the industry consolidates and responds to such consumer demands. According to new Qualtrix research, the average expected revenue loss due to poor digital experiences in the automotive industry is 18%.

That’s why buying Shift Fair Technology is so important.

honestly he has turbulent past noted Failed attempts to commercialize car leasing and subscriptions, has spent the last 18 months building a fintech platform, a platform that allows customers to buy cars from a variety of sources from the comfort of their homes; Test drive planning, execution and delivery; work with trade-ins; buy insurance; buying or financing a car; And, as Fair CEO Brad Stewart said, “buy whatever you want to plug into a car deal.”

Dealers can also take advantage of this technology as they can “manage the entire transaction with their own digital on-board platform and then easily schedule home delivery,” the release said. Fourth Quarter and FY 2021 Letter to Shift ShareholdersNoting that the platform can help dealers not only participate in e-commerce, but also increase market share.

“This self-service arc, the ability to shop from the comfort of your couch, do it in two minutes, the integrated transaction capabilities that come with the brand promise—Shift gets it all? “I think they’re doing it strategically,” Stewart told gaming-updates. “Ultimately, self-service today needs to be better and better, allowing you or me to come to the site and complete a transaction instead of picking up the phone to ask for support, which we still do a lot. Look.”

Stewart said he could envision a world that would eventually include all pricing options like subscriptions and leasing, two ventures that ultimately led to Faire’s demise as the startup felt it didn’t scale and didn’t have a product. . For example, on the one hand, leasing or a subscription can bring in an additional $25 per month compared to financing a car. While these options offer a range of service, maintenance, and trade-off benefits, in today’s economy, customers are less likely to increase their spending marginally.

Also, that extra $25 a month wasn’t enough to cover Fair’s operating costs, meaning that the company’s scaling was very inefficient and unprofitable. So unprofitable that, despite recently winning a product feature, Fair was forced to sell its most valuable asset after actually spending most of its money: The company raised a total of $2.1 billion over 13 rounds, the last of which in 2019. .

Now, without paying up front, Shift is using Faire technology and its relationships with dealers to lay the groundwork for future auto-purchases. Expected to close in the second quarter, Shift will acquire the assets of Faire for $15 million in cash and several Class A common shares equal to 2.5% of Shift’s outstanding shares. At the current share price, this is approximately $44.8 million, but the actual amount will depend on the price of Shift shares at the time of the closing of the transaction.

The purchase will be fully funded by SoftBank Group, which has agreed to provide a $20 million loan to repay the shift in 2025 to offset some of its losses. SoftBank Vision Fund Invests $385M Series B Fair and SoftBank itself, along with Mizuho Corporate Bank, returned $500 million in debt financing in 2019. Stewart said Faire’s debt to SoftBank Group is from December 2020.

While the Fair dealer team will join the shift, Stewart is unlikely to follow suit and instead plans to spend some time considering his next move, director gaming-updates said. Fair’s other assets – their old fleet of vehicles and consumer accounts – are being sold privately to a financial buyer. The proceeds will go into the company’s cash reserves, which Stewart said will be used to pay down debt.

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