Vroom hits the brakes on its online used car business to go full throttle on auto financing and AI
Vroom is shutting down its online used car marketplace and shifting all of its resources and capital into two business units focused on auto financing and AI-powered analytics. About 800 employees, or 90% of its workforce, will lose their jobs as a result, according to a regulatory filing.
The company said it is suspending all used car transactions through vroom.com and plans to sell off its used vehicle inventory to wholesalers. The company said it has not determined how much this wind-down will cost, partly because of uncertainty on what its used vehicle inventory will sell for, according to the regulatory filing.
Vroom, which went public in 2020, said it now plans to concentrate on two other businesses its owns and operates: United Auto Credit Corporation (UACC) and CarStory. UACC, an automotive finance company, and CarStory, which developed an AI-powered analytics and digital services platform for automotive retailers, will continue to operate.
Vroom was part of a wave of U.S. startups that launched about a decade ago all aiming to disrupt used car sales and the traditional dealership model. Most of these startups — a batch that included Shift Technologies, Beepi and Fair.com — have shut down or were acquired. Vroom survived and emerged as competitor to Carvana, which went public in 2017.
The company had one of the more successful IPOs of 2020, its share price more than doubling on its first day of trading and raising $468 million, above earlier plans for $356 million. Its share price hit a high of $65.01 in August 2020, only to come tumbling down more than 60% over the following year. The drop in valuation continued into 2022, pushing Vroom shares to under $2. Vroom shares closed at $0.53 on Monday and then dropped to $0.25 after the company announced its plans to shutter the e-commerce business. Shares are now hovering at about $0.32.
It was during those high-flying stock days that Vroom acquired Vast Holdings, which included CarStory, for $120 million in cash and stock.
At the time, the acquisition was couched as complementary to Vroom’s e-commerce business. The Austin,Texas–based company used machine learning — a form of AI in which computer systems can analyze, process and learn from data — to analyze millions of vehicle listings a day. The software it developed could then be used to provide predictive data to Vroom’s e-commerce platform. Vroom has since sold those services to third parties as well.
In October 2021,Vroom acquired United Auto Credit Corporation for $300 million in cash.