Online marketplace Shift, which last month announced a series D fundraising round led by Lithia Motors as well as a partnership with the dealer group, has quadrupled its floorplan capacity thanks to a new credit line for buying used cars.
And with this news also comes more good news for Shift: Lithia has acquired more equity interest in the online marketplace.
“Our floorplan capacity is now four times larger than our previous credit line and can allow Shift to access financing to scale to over $1 billion in revenue,” Shift co-chief executive officer Toby Russell said in a news release Thursday.
“In addition, the interest rate on the new facility is significantly lower, resulting in a 70-percent reduction in cost per dollar floored,” he said. “Securing a floorplan facility, a common mechanism to finance vehicle inventory, is one of the initial areas of operational collaboration with Lithia.”
With its $54 million investment, Lithia led the $140 million round of Series D financing in Shift that was announced in September.
All told, the round, which included equity and debt, more than doubled Shift’s total financing of equity and debt, bringing it to $265 million.
Lithia and Shift also formed a strategic partnership, and Lithia president and CEO Bryan DeBoer is joining Shift’s board of directors.
As for the latest in their partnership, Lithia chief financial officer John North said in Thursday’s news release: “Our deep industry relationships resulted in an immediate benefit for Shift. Access to capital for inventory procurement will increase vehicle sales. As a result of this collaboration, Lithia has received an additional equity interest in Shift.”
During a conference call with the investment community last month to discuss the investment and partnership, DeBoer addressed where the collaboration between Shift and Lithia could go, along with outlining several “milestones” to be reached as part of that.
“The identification of several initial areas of operational collaboration are defined as milestones,” DeBoer said. “These will serve as guidance to accelerate Shift’s scale and profitability. Successfully achieving these milestones can provide Lithia additional ownership in Shift, accelerate growth and build stronger ties between our two companies.”
He added during the call: “Ultimately, we see multiple options for our future growth together, including the potential to combine our organizations or to support Shift’s standalone pathway to an independent publicly traded company.”
In the news release, DeBoer emphasized the goal is for it to be “more than a financial investment” in the online marketplace.
“This is the first of several milestones identifying areas of partnership between our companies,” DeBoer said. “As Lithia and Shift grow and gain efficiencies, we can further increase our ownership, strengthening the bond between our organizations.”