Cliff Banks - The Banks Report

Shift Secures Floor Plan Credit Leveraging Lithia Investment

October 11, 2018 — Automotive online transaction platform Shift Technologies is beginning to see the early benefits of the recent $54 million investment from Lithia Motors, one of the country’s largest dealership groups.

Shift announced this morning that through its relationship with Lithia, it has secured a floor plan credit line four times larger than what it had before and now will be able to scale beyond $1 billion in revenue. The credit line will allow Shift to acquire significantly more inventory at a lower interest rate resulting in a 70% reduction in cost per dollar floored, according to a press release announcing the expanded relationship.

Lithia, with its $54 million investment in September, led the Series D round totaling $141 million consisting of $70 million in debt and $71 million in equity. Other participants included Alliance Ventures, BMW iVentures, DCM, DFJ, G2VP, Goldman Sachs Investment Partners and Highland Capital — all previous investors in Shift. The September round brought total invested in Shift to $265 million. The credit line also gives Lithia more equity in Shift.

Shift will begin expanding beyond the California market this year, where it will sell a projected 8,000 vehicles by the end of 2018.

In April, Shift announced a partnership in which Cox Automotive’s Manheim Auctions would provide it with vehicle storage, detailing, imaging and reconditioning services. An earlier partnership with Hertz, which began in late 2016, was called off after it became apparent the car rental firm’s retail stores would compete with Shift.

The investment from Lithia is intriguing because it signals the dealer group’s serious entry into the mobility world. The level of investment shows Lithia has big plans for Shift. Whether that includes Lithia finding some way to be involved in the peer-to-peer market — which is where Shift is focused today — or involves helping Shift pivot to a more dealer-focused model remains to be seen.

 

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