Online used-car seller Shift Technologies Inc. is closing its Sacramento maintenance hub by the end of this year, along with six others, as a cost-cutting measure.
The planned closures were revealed in a Securities and Exchange Commission filing by the San Francisco-based company on Monday. Shift (Nasdaq: SFT) also announced Tuesday that its CEO is stepping down and that it's agreed to a merger with Richmond, Virginia-based consignment auto trader CarLotz Inc. (Nasdaq: LOTZ).
Shift’s Sacramento location is at 175 Commerce Circle, which is off Highway 160, northeast of Downtown Sacramento. The company didn’t return an email seeking comment. In an SEC filing Tuesday, Shift said it would close seven of its inventory inspection, reconditioning and storage facilities, or "hubs," as part of a "strategic review of the business."
Swift said it's consolidating operations to its most efficient channels by the end of the year. The hub closures will result in a workforce reduction of approximately 60%. At the end of last year, the company had 1,300 employees.
Shift is also closing hubs in Seattle, San Diego, and four in Texas, including Austin, Houston, San Antonio and Dallas.
The company estimated a one-time severance cost of about $2.4 million.
Shift opened its Sacramento operation in 2019 when it was still a private company supported by investors including Lithia Motors Inc. (NYSE: LAD), Alliance Ventures, BMW iVentures and Goldman Sachs Investment Partners.
In an SEC filing in May, Shift raised doubts about its ability to survive as a going concern due to mounting losses and high debt. That disclosure came less than two years after the company went public. Shift went public in October 2020 in a $300 million reverse merger with a special purpose acquisition corporation, or SPAC, called Insurance Acquisition Corp.
During the pandemic, computer chip shortages have hampered auto manufacturing, which has sent used-car prices soaring, but it has also meant scarce inventory of used cars.
Shift sought to make car-buying fast, convenient and accessible by offering instant quotes, financing and at-home pickup and delivery. It put used cars through a 150-point inspection program and delivered them with a five-day guarantee.
Along with the merger and cuts, the company said Shift CEO and co-founder George Arison will step down, effective Sept. 1.
