Vroom is discontinuing its online platform for the sale of used cars to focus on auto financing and AI-driven analytics, reallocating resources accordingly. This shift will result in the displacement of around 800 employees, constituting 90% of its workforce, as per a regulatory filing.
The company will halt all used car transactions on vroom.com, opting to sell off its existing pre-owned vehicle inventory to wholesalers. The exact costs associated with this wind-down are uncertain, largely due to the unpredictability of the selling prices for the used vehicles, as detailed in the regulatory filing.
Post its 2020 public offering, Vroom is redirecting its attention to two subsidiary entities: United Auto Credit Corporation (UACC) and CarStory. UACC specializes in auto financing, while CarStory offers an advanced analytics and digital services platform tailored for automotive retailers, both of which will remain operational.
Having emerged as a survivor among a cohort of U.S. startups aiming to disrupt the pre-owned car market and traditional dealership model, Vroom distinguishes itself from now-defunct or acquired counterparts like Shift Technologies, Beepi, and Fair.com. Notably, Vroom positioned itself as a rival to Carvana, which went public in 2017.
Following a successful IPO in 2020, where its stock price more than doubled on the first trading day, raising over \\(468 million (surpassing the initial \\\)356 million target), Vroom’s share value peaked at \\(65.01 in August 2020 before declining by over 60% in the subsequent year. This downward trajectory continued into 2022, with Vroom shares falling below \\\)2. After announcing the discontinuation of its e-commerce segment, Vroom’s shares closed at \\(0.53 on Monday, further dropping to \\\)0.25, and currently stabilizing around $0.32.
At its peak market performance, Vroom acquired Vast Holdings, including CarStory, for $120 million in a mix of cash and stock. This acquisition was strategically aligned with Vroom’s e-commerce activities. Harnessing machine learning in Austin, Texas, Vroom utilized AI algorithms to analyze extensive vehicle listings daily, enabling the delivery of predictive insights on its e-commerce platform and extending these services to external clients.
In October 2021, Vroom finalized the acquisition of United Auto Credit Corporation for $300 million in cash.
