Consignment car lot in expansive mood
- July 1, 2012
Michael Bor, Will Boland and Aaron Montgomery are taking the consignment concept to a new level with CarLotz, a company that manages the selling process for car owners. The used-car consignment company opened its first lot in June 2011 on the Midlothian Turnpike “Motor Mile” of auto dealerships in Chesterfield County.
Bor, the company’s CEO, soon was thinking about expansion. In May, CarLotz announced it had leased a lot on West Broad Street for its second site. The company is scouting additional locations. “We are keeping our eyes on the Virginia Beach area as the possible next place,” Bor says. “We are also looking at Northern Virginia.”
In addition to selling cars, the company began selling all types of motorcycles.
Bor, a former investment banker came up with the CarLotz idea after seeing a number of cars parked alongside the road with “for sale” signs in their windows. “I thought there should be a better way to sell your car,” Bor says. He discovered that up to 14 million cars are sold privately in the U.S. each year. “It’s a massive market and there is no efficient way to do it.”
Bor and his partners raised $525,000 in financing in April 2011 to start the business. Another round of financing in March 2012 brought $1.5 million. The company began by selling cars for friends and family. Today more than 60 percent of CarLotz’s business is referral based. “Repeat business represents about 10 to 15 percent of our business,” Bor says.
The sales concept is straightforward. Owners pay CarLotz $199 to have their cars prepared for sale, a process that includes cleaning, inspections, professional photographs and listing each car on three dozen websites. CarLotz also handles all the calls, emails and test drives in the selling process as well as all Department of Motor Vehicles paperwork. “We also offer financing and warranties to buyers,” Bor says. “We can add warranties from 30 days to five years depending on the car and the desires of the buyer.”
When a car sells, CarLotz keeps $599 from the sale. (The same fee structure applies to motorcycle sales.) “We enable the private seller to access the private market value for a car without the traditional hassles of a private sale,” Bor says. “We make sure that people are comfortable in the used car transaction. We have three tenets for our business: integrity, transparency and customer service.”
Currently CarLotz has about 75 cars on its lot. “But they are selling very quickly,” Bor says, noting the company has sold hundreds of cars since its opening. “Our volume has exceeded our own expectations. There has been tremendous positive feedback.”