This car dealership is closing half of its US locations – Best Life

Buying a car can be both exciting and stressful. If you know the make and model you want, getting to the dealership isn’t too much of a hassle, but if you’re scheduling test drives for different options, it can be overwhelming to say the least. There’s also the choice between new or used vehicles, financing or leasing, and other small but important decisions about features and upgrades.

Fortunately, most dealership salespeople are well-equipped to answer your questions and help you make the right choice. But your dealership options may become more limited as a popular dealership just announced it will close half of its locations by July 8. Read on to find out which locations are closing in the United States.

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Like so many other sectors of the economy, the automotive industry has been rocked by the COVID-19 pandemic. According to Kelley Blue Book, the market is currently characterized by high prices, low inventory and little incentive, which is further compounded by those pesky supply chain issues we keep hearing about. In particular, a continued shortage of microchips has prevented automakers from producing enough new cars to meet demand, and new COVID-19 lockdowns in Asia and war in Ukraine have delayed other auto parts.

In light of this, many car buyers have opted to buy used vehicles. But thanks to good old supply and demand, used vehicle prices have now skyrocketed. And a nationwide car dealership has been directly affected by this change, now choosing to close half of its locations.

used car dealer
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If you’re looking for a used car, you may need to look elsewhere than at CarLotz. According to a press release from the used car and consignment dealership, 11 locations will be closed in the United States, nearly half of CarLotz’s total number of locations.

Concession stores, also known as “hubs,” began closing on June 21, and closing activity will end on July 8, CarLotz confirmed in the press release. The closures will also result in a 25-30% reduction in the company’s workforce.

“While decisions that impact our teammates are not taken lightly and are not easy, we believe hub closures are a necessary step to help improve the company’s financial performance,” Lev Peker, CEO of CarLotz, said in a statement. “We greatly appreciate all our teammates have done for CarLotz and are committed to supporting them through this transition.”

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Having to close locations is never a good sign, but CarLotz also chose not to open new locations it had on the register, canceling plans for three dealerships with newly executed leases.

Existing hubs closing include those in Lilburn, Georgia; Bakersfield, California; Clearwater, Florida; Highland Park, Ill.; Merritt Island, Florida; Mobile, Alabama; Madison, TN; Map, Texas; San Antonio, TX; Lynwood, Washington; and O’Fallon, Illinois.

CarLotz’s four locations in Virginia, where the company is based, will not be affected, as reported by the business journals.

used car price on shop window
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The main reason for the mass closures is due to the nature of the auto resale market, the company said. With such demand for used cars, CarLotz highlighted the challenges associated with acquiring inventory.

“Over the past twelve months, our supply has been tested. Growing our consumer vehicle lineup is a priority to complement our retail remarketing supply channel and reduce our reliance on auctions,” said Peker said in a statement. “We believe the closures should allow us to improve sourcing on a smaller hub base and focus on the productivity and efficiency of the remaining hubs.”

CarLotz went public in 2021, as reported by the Business reviews. At that time, the company’s market capitalization was around $1.2 billion, but things have taken a drastic turn since then. In 2021, the company reported nearly $40 million in losses, and in the first quarter of 2022 alone, losses totaled $24 million.

The company expects the site closures will allow for a clearer focus on “future profitable growth,” the press release says, and CarLotz estimates the closures will reduce operating losses by $12 million to $13 million. “We also believe this is the first step to building a stronger CarLotz, improving cash preservation and paving the way to profitability,” Peker added.

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