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Mostly everyone is buying a new car during COVID-19: co-CEO

With people continuing to ditch dirty mass transit during the COVID-19 pandemic, it’s a good time to be in the business of selling cars online, says co-founder Toby Russell.

“We are seeing increased demand for personal vehicles. Public transit is being viewed as unsafe in many ways and shut down in a lot of locations. Folks still need to get around, get to the grocery store, God forbid get to the hospital — and they want a personal vehicle for that,” Russell told Yahoo Finance’s The First Trade. “What we are seeing is people saying I would like to get around town in my own vehicle.”

The data underscores Russell’s contention.

Car-selling platform Edmunds estimates that third quarter sales of new cars and trucks rose 30.6% from the second quarter. Sales from major automakers such as General Motors, Fiat Chrysler and Hyundai all improved markedly in the third quarter from the second quarter.

“We're seeing the China market come back as well as the United States and North America in general, a little faster than we thought. I would say we're cautiously optimistic. There's a lot that we need to see start going in the right direction. But right now we're seeing especially retail demand come back more quickly than we expected,” General Motors Chairman and CEO Mary Barra told Yahoo Finance in September. — an online auto buying platform that focuses on the California and Oregon markets at the moment — is wasting no time to try and capitalize. The company will be the latest Special Purpose Acquisition Company (SPAC) to debut on public markets on Thursday under the ticker symbol ‘SFT.’ While Shift is seeing sales surge during the pandemic, the upstart does expect to lose $54.7 million this year as it builds out its infrastructure. The company expects to lose nearly $65 million in 2021, before losses begin to subside, says Russell.

Shift’s path to profitability is not without risk in the ultra-competitive auto sales market. But rival Carvana does offer hope as to Shift’s potential as a public company if it could execute its vision and new online auto shoppers from the pandemic stay true to the buying process in the future.


Carvana said on Sept. 22 it achieved record sales, gross profit per unit and operating margins in the third quarter as customers avoided dealerships in favor of Carvana’s direct delivery model. For the first time, Carvana disclosed it will be breakeven. Carvana shares are up 200% over the past year.

“We’re a seven-year-old company. Three or four years ago we were at a negative 20% EBITDA margin, and then negative 16%, and then negative 9% and negative 6%. We announced that this quarter we expect to be approximately breakeven from an EBITDA [earnings before interest, taxes and depreciation] perspective. The scale in the business is really showing up in that incredibly rapid leverage,” said Carvana founder and CEO Ernie Garcia on The First Trade after the pre-announcement.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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