Canada Drives present process restructuring because it recordsdata for creditor safety 

Vancouver-based auto market Canada Drives is present process restructuring of its enterprise operations after submitting for creditor safety.

On Tuesday, the used automobile retailer introduced plans to slim down its enterprise strains. To implement its restructuring plans, Canada Drives stated it has filed for and was granted creditor safety below the Collectors Association Act.

“The rising prices of holding stock, amongst different headwinds, has made this particular enterprise mannequin not viable within the long-term.”

The restructuring follows present struggles at Canada Drives, which made employees cuts earlier this 12 months, citing macroeconomic situations. On the time, Canada Drives declined to share the variety of individuals laid off.

Even whereas Canada Drives raised $50 million CAD in fairness financing in October, Canada Drives informed The Globe and Mail on the time that it diminished hiring plans after failing to boost a focused $100 million.

Based in 2010, Canada Drives provided a platform for customers to purchase, promote, and trade-in autos via its platform. The startup would purchase, examine, recondition, and certify the entire used automobiles on its platform, holding its personal stock. Canada Drives additionally supplies financing choices, and picks up and delivers automobiles straight from and to prospects as soon as bought.

As a part of its plan to trim its enterprise operations, Canada Drives will solely deal with two particular enterprise strains, and is slicing these again. Canada Drives will proceed to run its market, however slightly than holding automobile stock itself, gross sales shall be facilitated through a community of automotive dealerships all through Canada. Automobile financing choices may also now be facilitated via automotive dealerships.

“The rising prices of holding stock, amongst different headwinds, has made this particular enterprise mannequin not viable within the long-term,” wrote Canada Drives in its assertion. “Throughout this transition, Canada Drives intends to proceed delivering its industry-leading automobile purchasing expertise to Canadians on all its present stock and honoring its commitments to each current and future prospects.”

In accordance with the corporate, this restructuring plan will allow it to “scale a much less capital intensive and worthwhile enterprise.”

RELATED: Layoffs unfold to Clutch, Canada Drives as on-line auto marketplaces gear down

Canada Drives is a part of a rising variety of Canadian tech startups which might be dealing with liquidity points because the sector faces robust fundraising situations, inflation, and excessive rates of interest, amongst different market variables.

Particularly, on-line used automobile marketplaces are additionally feeling the crunch. Toronto-based Clutch, which additionally operates within the on-demand used automobile {industry}, laid off roughly 65 p.c of its employees in January. Clutch additionally diminished its geographic attain after market situations prompted the startup to halt the ultimate levels of closing the $95 million CAD Collection C spherical.

South of the border, on-line automobile marketplaces are additionally dealing with challenges. Tempe, Arizona-based Carvana lower some 1,500 staff, or roughly eight p.c of its workforce late final 12 months. In its third quarter 2022 earnings report, Carvana warned that waiting for the fourth quarter it confronted diminished demand for used automobiles, growing rates of interest, and better used automobile depreciation charges.

Function picture courtesy Canada Drives.