Online used-vehicle retailer Clutch is laying off about 65 per cent of its staff and pulling out of all provinces west of Ontario as turmoil in the technology sector forces the Toronto-based company to halt its expansion and refocus on its core business in Eastern Canada.
CEO Dan Park said the pull-back and job cuts that will affect 148 employees were due to issues with a $95 million Series C funding round the company has been working to close.
“We are a tech company as much as we are an automotive company, and this is really a reflection of the tech market,” he told Automotive News Canada.
“The tech industry right now, the capital markets are continuing to deteriorate. Deals are taking longer to get done.”
Park would not say whether Clutch still expects to raise the $95 million, but said the company had “secured its future” by pulling back to its better-established markets in Ontario and Atlantic Canada.
The layoffs began Jan. 17 and focus on employees responsible for the company’s Western Canada operations. Some cuts were effective immediately, while other staff will be “transitioned out,” Park said.
Clutch will have about 80 employees, most concentrated at offices in Toronto and Halifax, following the significant round of layoffs.
The online vehicle retailer joins a series of North American technology companies that have recently made deep staffing cuts. Tech giants Microsoft and Amazon, Facebook parent Meta, Canada’s Shopify, among many others, have scaled back their workforces over the past six months, many paring down headcounts between 10 and 20 per cent.
Clutch’s retrenchment comes after years of rapid growth at the company, which was founded in Halifax in 2016. It bills its ecommerce platform as a better way to buy and sell vehicles.
In November 2021, Clutch raised $100 million to pursue growth across Canada, aiming to serve 90 per cent of the country by the end of 2023. It had expanded into all Canadian provinces except Manitoba and Quebec by the middle of last year.
While the company has run into trouble securing growth capital, Park said its vehicle sales are strong. Clutch booked more than $200 million in revenue in 2022, roughly 2.3-times the amount it earned a year earlier, he said.
“For us, the path is strong from a retail perspective. Unfortunately, this was really a reflection of the other half of our business, which is technology.”
Park said the recent decline in used-vehicle prices had no bearing on the company’s decision to pull out of the markets in Western Canada. Clutch expects to continue executing across Ontario and Atlantic Canada this year, he added.
“We’ve built really robust pricing algorithm technology that allows us to respond to pricing movements in real-time. We’ve been very on top of changing prices.”
Park would not speculate on when Clutch would be prepared to re-enter Western Canada. He said it would depend on when the tech market rebounds.
“The moves that we made yesterday, although tough … allow us to control our own destiny and invest at the right time and do it off a stronger platform and foundation.”
