Lithia Motors, Inc. (NYSE: LAD) and Shift, a San Francisco-based ecommerce retailer, announced Shift has secured a credit line for acquiring used vehicle inventory. The floor plan facility will enable Shift to grow more quickly while reducing interest expense.
Shift is an innovative platform that provides consumers a digital purchase and selling experience, providing vehicle pickup and delivery at a customers location. Shift currently operates throughout California, is the largest used car retailer in the San Francisco Bay Area and will sell approximately 8,000 vehicles in 2018. In September, Lithia announced a strategic partnership with Shift, committing $54 million to lead their series D fundraising round.
Our floor plan 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, said Toby Russell, co-CEO of Shift. In addition, the interest rate on the new facility is significantly lower, resulting in a 70% reduction in cost per dollar floored. Securing a floor plan facility, a common mechanism to finance vehicle inventory, is one of the initial areas of operational collaboration with Lithia.
John North, Lithia CFO stated, 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.
We want the partnership with Shift to be more than a financial investment, said Bryan DeBoer, Lithia President and CEO. This is the first of several milestones identifying areas of partnership between our companies. As Lithia and Shift grow and gain efficiencies, we can further increase our ownership, strengthening the bond between our organizations.
Lithia and Shift are teaming up to leverage Shifts robust technology with Lithias nationwide service and delivery network to provide customers an easy, transparent experience wherever, whenever and however they prefer.
Lithia Motors, Inc. is one of the largest providers of personal transportation solutions in the United States and is among the fastest growing companies in the Fortune 500 (#294-2018). Consumers can buy, sell and service vehicles digitally or through our 182 nationwide locations. Our mission statement, Growth Powered by People, drives us to continuously improve and to give back to our communities.
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Lithia Motors, Inc.
John North, (541) 618-5748
President and Chief Financial Officer