Online Used-Car Retailer Vroom to Shutter Operations
The COVID-19 pandemic brought a seismic shift in how people work, play, and live, and that includes car shopping. Faced with the existential crisis of having no physical customers, dealers began offering remote car-buying services and shipping. Online retailers took off, too, but the party never lasts forever. Vroom, an online used-vehicle retailer, recently announced that it would sunset its e-commerce business, suspending sales on its website.
The company said it would liquidate its current inventory through wholesalers and noted that there would be no new vehicle purchases. Additionally, it’s cutting around 90 percent of its workforce in a bid to cut costs and boost value.
Two Vroom subsidiaries, United Auto Credit Corp and CarStory, will continue operating, and the company noted that the layoffs would not affect people at the two divisions. Vroom CEO Tom Shortt said, “Despite significant efforts to do so, we ultimately were unable to raise the necessary capital in the current market. Obviously, we are very disappointed with this outcome.”
The super-volatile used car market hasn’t been kind to Vroom or any other used-car retailer. Vehicle values have been all over the map, making it exceedingly difficult to purchase and resell cars efficiently and without taking losses. Margins are thin, and now that people can go out and buy cars in person, the virtual model has lost some of its appeal.
[Image: Tada Images via Shutterstock]
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Chris grew up in, under, and around cars, but took the long way around to becoming an automotive writer. After a career in technology consulting and a trip through business school, Chris began writing about the automotive industry as a way to reconnect with his passion and get behind the wheel of a new car every week. He focuses on taking complex industry stories and making them digestible by any reader. Just don’t expect him to stay away from high-mileage Porsches.
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A so-called tech business with an unsustainable business model finally fails. This is something that should have happened over a year ago. Some how Carvana has avoided the same fate, however their time is coming. I would add, Carvana also owns "Drive Time", a used car business who depends to the stupid among us as their customer base.
Maybe they took their business plan from them:
From Vroom, Vroom to sputter, cough and dies...
That's what happens when you don't take your business out on the road and give it an Italian tune-up once in a while.
I sold a car to Vroom once. They paid me way too much money for it. I watched it progress through their site and I think they sold it for $500 more than they paid me.