After going public in 2020, Vroom announced it shut down its used car sales operations this week.
In a regulatory filing this week, Vroom told regulators it shut down its online marketplace and would lay off about 800 employees, or 90% of its workforce, as a result. Instead of competing against sites like Carvana (which has faced major hurdles of its own in recent years) and traditional used car dealers, the company will pool its resources into automotive financing and AI-powered analytics, according to its statement to investors.
“Under the Value Maximization Plan approved by Vroom’s Board of Directors, the Company is suspending transactions through vroom.mcom, planning to sell its current used vehicle inventory through wholesale channels, halting purchases of additional vehicles, and executing a reduction-in-force (read: layoffs) commensurate with its reduced operations,” Vroom told shareholders Monday.
United Auto Credit Corporation, Vroom’s financing arm which it acquired for $300 million in October 2021, and CarStory, its AI-powered automotive retail analytics and digital services platform, will still “continue to serve their customers”. The CarStory website is also still operational, essentially as a search page for Carfax vehicle listings.
Initially, Vroom emerged among a wave of startup companies, including Carvana, looking to disrupt the traditional dealer model by making used car buying a smoother, less stressful process for consumers. We had our own frought experience trying to buy a car through the website, though the company did have a successful IPO in 2020. At its peak, Vroom shares traded for about $65 in August 2020, but fell dramatically the following year.
With Monday’s announcement, shares in the company dropped from $0.53 to about $0.25 per share, before slightly bouncing back Tuesday.
