In December, David Tvaltchrelidze bought a 2016 Mazda Miata for $16,450 from Shift Technologies Inc., one of a crop of startups selling used cars and trucks exclusively online. Seven months later, Shift offered to buy it back for $20,800, which would net Tvaltchrelidze a sporty 26% return. “I wish I had bought 10 of them,” he says.
Despite the markup, Shift would be able to resell the car quickly and still pocket about $2,000 in profit. And Tvaltchrelidze hasn’t yet agreed, given the price he’d have to pay for another used car.
The used-car market has gone crazy over the past year, as social distancing and a global computer chip shortage have upended the auto industry, and companies such as Shift are thriving. The 3-year-old startup sold 10,323 vehicles in the first half of this year, triple the level of the same period in 2020. Vroom Inc., a competitor, doubled its business, selling almost 34,000 cars and trucks over the same period, while Carvana Corp., the largest of the used-car web dealerships, sold 200,272 vehicles, a company record.
The online used-car trade isn’t new, exactly—web marketplaces such as Craigslist account for about half of the 40 million used cars that trade hands every year in the U.S. But the upheaval of Covid has changed the digital market significantly. “It’s not that there was a pandemic customer or a non pandemic customer,” says Vroom Chief Executive Officer Paul Hennessy. “It’s just that there was an event that changed the way people thought about what they would have delivered to their home.”
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