Florida. The Mid-Atlantic. New England. Illinois, Texas, Colorado and Arizona. California.
Not only do these areas contain some of the largest cities in the country, but they are also areas where the commercial consignors utilizing CarLotz have heavy volumes of vehicles for the company to remarket at retail.
So with a $30 million round of equity capital funding now in its coffers, the CarLotz chain of used-car consignment stores will push northward, southward, eastward and westward to add at least five locations a year and expand into these areas, says chief executive Michael Bor.
CarLotz, which began in Richmond, Va. in 2011, has spread its wings outside of Virginia in the past year, expanding its store count to five and moving into North Carolina, as well.
Bor said the company has been pleased with the process of getting those stores rolling, and its commercial accounts are pleased with the retail remarketing services of CarLotz.
“Based on back from our commercial accounts and extensive discussions with them on where their vehicles are located and where they’re having difficulty remarketing, or getting appropriate pricing on their vehicles, it became very apparent that we should have these locations in key markets all around the country so that we can serve our national accounts at a national level,” Bor said in a phone interview Tuesday.
The investment comes from TRP Capital Partners, and it’s the first round of investment in which all the capital has come from one private equity source. Prior funding, Bor said, has come from individuals and small groups pooling together.
Interestingly enough, TRP is the rare blue-chip, major private equity fund that focuses entirely on transportation, Bor said.
“There aren’t many of those that exist,” Bor said. “We got to know them just over time, because they are in our space. And we just kept in touch and they were very interested to see how scalable our commercial activities can be and how big a company we can be, if we have locations around the country.
“Both their capital and their industry s and expertise are going to be tremendously helpful as we continue our national expansion and growth strategy.”
Asked about the process of choosing exactly where CarLotz will be setting up shop in these new markets, Bor said: “We’re looking at markets that are kind of top auction markets. And those tend to be the largest cities in the country.
“But the fact that we remarket at retail means that we have to be a very visible retailer on the automotive retail strip. We like to locate on major auto miles in the cities in which we set up shop,” he said. “And we feel that the better location we have, the faster the vehicles will sell, the better pricing we’ll be able to get for our commercial accounts. So we’re really looking for those marquee properties on the automotive row.”
And while it may sit nestled between the wholesale market traditionally led by auctions and the retail market traditionally led by dealers, CarLotz doesn’t aim to be a thorn in either’s side.
It’s very much about working with the existing players. The model is less about disruption and more about supply chain management.
CarLotz is aiming to “build a system” where this very small slice of used-car market that’s retail-ready at wholesale can go direct to retail, Bor explained in another interview, earlier this year.
Asked how dealers and auctions have taken to the growth over the past year, Bor said Tuesday: “We now work for dealers, and so what I think is great about the dealership space is that there’s just healthy amounts of competition, meaning that we all ultimately compete for buyers to show up and buy vehicles, but we’re also very aware that there are millions and millions of transactions every year.
“And any way we can help each other out, basically benefits everyone,” he said. “We help other dealers by selling their trade-ins or vehicles that have aged on their lot.
“And then on the auction side, I think they’re generally aware of us and interested to see how we grow with several of our key accounts which happened to be shared amongst us and the auctions.”
CarLotz is aiming to launch at least five stores per year in the near-term. Within 24 months, the goal is for its store count to reach 15 (including the five existing stores), “and we’ll really be located such that the shipping costs to get to our locations will be minimal, which will further help our accounts increase their retail remarketing lift,” Bor said.