Shift Technologies, Inc., a leading consumer-centric omnichannel used auto retailer, has revealed plans to restructure its workforce in a bid to align its people and responsibilities with the company's omnichannel sales strategy. The decision comes after a thorough review conducted by the newly appointed CEO, Ayman Moussa, as well as evaluations carried out during the strategic alternatives review. The objective of the restructuring is to enhance the customer experience, streamline the sales process, and optimize fixed costs. As part of this initiative, Shift Technologies will focus on its core operations and discontinue investment in the dealer marketplace business.

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Workforce Restructuring to Improve Operational Efficiency

Under the leadership of CEO Ayman Moussa, Shift Technologies aims to capitalize on operational process improvements to increase unit sales and unit economics. As a result of observations made during his first month in office, Moussa, drawing from his extensive 20-year experience in the auto industry, has announced a series of changes to drive performance. These changes involve eliminating centralized operations roles, granting more ownership to on-ground team members in the company's hubs, and discontinuing investment in the dealer marketplace. Urgency is at the forefront of the company's agenda, as they strive to enhance performance and maximize available resources.

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Significant Workforce Reductions Planned

As part of the restructuring plan, Shift Technologies expects to reduce its workforce by approximately 34%. Primarily, this reduction will affect operational roles, which account for around 60% of the total headcount reduction. The elimination of centralized support will drive increased efficiency throughout the company. Additionally, technology roles will also see a reduction due to the decision to discontinue investment in the dealer marketplace. General corporate roles will be affected as well. These necessary adjustments have been challenging for the company, given the dedication and commitment demonstrated by the entire Shift team.

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Projected Cost Savings and One-Time Charges

Shift Technologies anticipates that the workforce reduction will yield annualized savings of approximately $14 million in selling, general, and administrative expenses (SG&A). However, the company acknowledges that there will be non-recurring charges of approximately $900,000, mainly associated with employee severance costs. Despite these short-term costs, Shift Technologies believes that the long-term benefits and improved operational efficiency will outweigh the initial financial impact.

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Continued Pursuit of Strategic Alternatives

Alongside the workforce restructuring, Shift Technologies remains committed to exploring strategic alternatives that maximize value for all stakeholders. This ongoing review process underscores the company's dedication to finding innovative solutions to optimize its position in the market and ensure sustained growth.