Vroom is shutting down its online used car marketplace and shifting all of its resources and capital into two business units focused on automated financing and AI-based analytics. About 800 workers, or 90% of its workforce, will lose their jobs as a result, according to regulatory filing.
The company said it is suspending all used car transactions through vroom.com and plans to sell its used vehicle inventory to wholesalers. The company said it has not determined how much that closing will cost, in part because of uncertainty about what its used vehicle inventory will sell for, according to the regulatory filing.
Vroom, which went public in 2020, said it now plans to focus on two other businesses it owns and operates: United Auto Credit Corporation (UACC) and CarStory. UACC, an auto finance company, and CarStory, which developed an AI-powered analytics and digital services platform for auto retailers, will continue to operate.
Vroom was part of a wave of U.S. startups that began about a decade ago, all aiming to disrupt used car sales and the traditional dealership model. Most of those startups—a batch that included Shift Technologies, Beepi, and Fair.com—have shut down or been acquired. Vroom survived and emerged as a competitor to Carvana, which went public in 2017.
The company had one of the most successful IPOs of 2020, its stock price more than doubling on its first day of trading and raising $468 million, above previous plans for $356 million. Its share price hit a high of $65.01 in August 2020, only to fall more than 60% in the following year. The decline in valuation continued in 2022, pushing Vroom shares below $2. Vroom shares closed at $0.53 on Monday and then fell to $0.25 after the company announced plans to shut down its e-commerce business. Shares are now trading at around $0.32.
It was during those high stock days that Vroom acquired Vast Holdings, which included CarStory, for $120 million in cash and stock.
At that time, the acquisition was made as complementary to Vroom’s e-commerce business. The Austin, Texas-based company used machine learning — a form of artificial intelligence in which computer systems can analyze, process and learn from data — to analyze millions of vehicle registrations a day. The software he developed could then be used to feed predictive data into Vroom’s e-commerce platform. Vroom has since sold these services to third parties as well.
In October 2021, Vroom acquired United Auto Credit Corporation for $300 million in cash.
