Vroom, the online automotive sales company, made a significant announcement on Monday that it will be closing its ecommerce business and shifting its focus to other operations. This decision marks the end of an era for Vroom’s online automotive sales, as the company plans to cease purchasing vehicles and sell off its remaining used vehicle inventory through wholesale channels. Additionally, Vroom anticipates reducing the size of its workforce as part of this transition.
Thomas Shortt, the chief executive officer at Vroom, expressed gratitude towards the company’s employees, customers, business partners, board of directors, and investors for their support over the years. He highlighted the company’s efforts to improve unit economics and enhance the customer experience, stating that these goals were successfully achieved. However, despite these accomplishments, Vroom faced challenges in raising new capital to sustain its automotive ecommerce business, ultimately leading to the decision to close this segment of the company.
Shortt explained that Vroom had been actively seeking additional capital to support its operations and extend its vehicle floorplan facility. Unfortunately, despite significant efforts, the company was unable to secure the necessary funding in the current market environment. As a result, Vroom will be redirecting its resources towards its other business operations.
Vroom’s remaining businesses include the automotive financing company United Auto Credit Corporation (UACC) and the retail-focused digital services provider CarStory. These entities will continue to operate as Vroom winds down its online automotive sales division. Robert Mylod, independent executive chair of Vroom’s board, emphasized the company’s commitment to responsibly managing its remaining businesses and maximizing value for all stakeholders.
The history of Vroom, along with other automotive ecommerce startups like Carvana and Shift, was marked by a focus on the used-vehicle market during the COVID-19 pandemic in 2020. While online car sales were projected to grow as a share of overall auto sales in the U.S., new car sales were on the rise, while used car sales were expected to decline, according to data from Industry Data and Insights for Cars Commerce.
In conclusion, Vroom’s decision to close its ecommerce business reflects the challenges faced in the competitive automotive sales industry. Despite this setback, the company remains committed to its remaining operations and will continue to adapt to the evolving market landscape. As Vroom transitions to a new phase, it will be interesting to see how the company navigates these changes and positions itself for future success.
