EBlock has pivoted its growth strategy.

Instead of a U.S.-wide expansion plan with a year-end 2023 target date, the digital wholesale marketplace will concentrate on its existing markets of Canada, the U.S. West, Midwest and Gulf States, parent company E Inc. chief executive Jason McClenahan said in an earnings release Tuesday.

This strategy shift comes amid “macro challenges” impacting the wholesale auto industry at large, including inventory shortages and historically high prices.

E Inc. reported a quarterly net loss of $12.7 million, against a $3.8 million loss a year ago.

Still, growth in EBlock marketplace transactions and EDealer subscribers helped drive 45% year-over-year growth in second-quarter revenue for E Inc., which came in at $30.1 million (USD).

The company reported a vehicles transacted tally of 52,719 for the quarter, a 27% increase attributed largely to its, “'digital-platform meets physical-location' strategy with the Quebec acquisitions, FastLane Auto Exchange and a partial period from Louisiana's 1st Choice Auto Auction,” E Inc. said in the release.

There were 12,101 marketplace participants at the end of Q2, a 44% year-over-year increase. This led to a record number of vehicles listed during the quarter.

“We continued to attract new marketplace participants, more vehicle listings and higher transaction values on our digital wholesale marketplace, EBlock,” McClenahan said in the earnings release.

“As an exchange, our EBlock platform benefits more from higher transaction volumes than higher vehicle prices. The wholesale market is facing ongoing macro challenges. Inventory remains extremely tight and pricing continues to be high which is impacting demand. This dynamic amplifies the need for auto dealers to seek an easy-to-use digital platform that enables them to profitably and effectively manage that inventory,” he continued.

“However, we are not immune to these macro factors. When the market normalizes, we believe we will be well positioned to earn more units per customer,” McClenahan said. “In the meantime, we have adjusted our strategy to focus our growth in our four existing markets, Canada, the U.S. West, Midwest and Gulf States markets, rather than expanding across the entire U.S. market by the end of 2023. Our 'digital-platform meets physical-location' strategy is designed to enable profitability sooner and an efficient use of our growth capital by expanding the digital radius beyond the limited physical auction radius.

“This strategy puts us in a strong position to capitalize on the changes underway in the market as dealers search for ways to improve efficiency, transact more frequently and compete with direct-to-consumer models.”