Used-vehicle retailer Canada Drives has filed for and been granted creditor protection as the company seeks to restructure its business and abandon online sales amid escalating inventory costs and weakening used-vehicle prices.
The Vancouver-based company said March 21 that its business model, based on a fully online purchasing and trade-in experience, has proved popular among car buyers, but is “no longer viable in the long-term.”
In a March 19 affidavit, submitted in support of the company’s filing under the Companies’ Creditors Arrangement Act (CCAA), CEO Cody Green said that Canada Drives’ ecommerce business, established in 2020, was “a challenge from the outset,” but began to encounter sustained losses last year.
“In the latter half of 2022, the cost of debt to own the vehicles purchased and sold increased at an unprecedented rate due to rising interest rates. The difficulties brought on by these increased carrying obligations were compounded by weakening used vehicle prices,” he wrote.