10:24 am, January 25, 2024
American used car firm Vroom is halting its online sales operation and laying off most of its workforce.
The Houston-headquartered company, which was a rival to Carvana and whose business model was copied by Cazoo, had been trying to raise money for its e-commerce arm but was unsuccessful.
As a result, it has now decided to stop online sales and will be selling its inventory to wholesale firms. It will also be cutting some 800 jobs, which equates to 90% of its staff, reported MarketWatch.
Vroom, which was founded in 2013 as AutoAmerica and became Vroom the following year, will instead focus on its car finance business – United Auto Credit Corporation – as well as its other company CarStory, which offers digital and analytics services for automotive trading and is powered by AI.
It went public in 2020 valued at $2.5bn (circa £1.96bn), hitting $8.1bn (£6.4bn) later that year, but as of the close of trading this Monday that figure had dropped to just $75m (£59m), according to CTech.
As well as stopping transactions and selling its stock, it’ll also cease buying more cars.
In a statement, Vroom CEO Thomas Shortt said: ‘As we previously disclosed, we intended to raise additional capital to fund our operations and support the extension of our vehicle floorplan facility beyond its current expiration date of March 31, 2024.
‘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. Two years ago, we set out to build a well-oiled machine, improve unit economics and dramatically improve our customer experience and I believe we achieved those goals.
‘I want to thank our dedicated Vroommates, customers and business partners, as well as our board of directors and investors, all of whom have supported us over the years.’
Robert Mylod, independent executive board chairman, added: ‘Although we were unable to raise the capital necessary to achieve profitability in our e-commerce operations, we are committed to responsibly managing our remaining businesses and prudently deploying our capital as we seek to maximise value for all of our stakeholders.’
Cazoo and fellow UK online used car retailer Cinch have also been struggling recently, with the former warning last month that it may go under and the latter revealing earlier this month that it lost more than £181m for the year ending April 2023.
Picture credit: Tim Goode/PA Wire/PA Images
