Vroom is shifting gears, taking the brakes off its online used car marketplace and redirecting its focus towards the future of automotive financing and artificial intelligence (AI) technologies. In a regulatory filing, the company announced the closure of its e-commerce platform, resulting in the loss of 800 jobs, with plans to sell its current used vehicle inventory to wholesalers.
The exact cost of this transition is uncertain at this time, as it largely depends on the selling price of the remaining inventory. However, Vroom is confident in its decision to pivot towards its two remaining business units: United Auto Credit Corporation (UACC) and CarStory.
“We are suspending all used car transactions through vroom.com and will concentrate our efforts and resources into these two thriving entities,” stated the company in its regulatory filing.
UACC is an established automotive finance company, while CarStory boasts an innovative AI-powered analytics and digital services platform for automotive retailers. These businesses will continue to operate and drive the company forward in this new direction.
When Vroom went public in 2020, it was one of many U.S. startups seeking to revolutionize the used car sales industry and disrupt the traditional dealership model. While most of its competitors, such as Shift Technologies, Beepi, and Fair.com, have since dissolved or been acquired, Vroom has persevered and emerged as a significant player, contending with other successful companies like Carvana.
Despite a promising start, with Vroom’s share price more than doubling on its first day of trading, the company has experienced some turbulence over the years. Its share prices plummeted by more than 60% in the past year, reaching an all-time low of $2 in 2022 after initially peaking at $65.01 in August 2020. Now, following the recent announcement of its pivot, shares are hovering at around $0.32.
During its initial success, Vroom made a strategic acquisition of Vast Holdings, including CarStory, for $120 million in cash and stock. At the time, this was seen as a valuable addition to its e-commerce platform, as CarStory’s advanced AI technology and machine learning capabilities allowed for the analysis and processing of millions of vehicle listings daily. Vroom even began offering these services to third parties.
In October 2021, Vroom made another significant move by acquiring UACC for $300 million in cash.
Now, with its focus shifted and its resources reallocated, Vroom is gearing up for a new chapter in its journey. By shifting to the forefront of automotive financing and AI technologies, the company is confident in its ability to drive towards a prosperous and innovative future.