Vroom suspends online sales, lays off most of its staff

Andrew Petroschev - UnSplash

Selling cars online isn’t as easy as it sounds

Vroom, an online used car retailer, has announced it is closing its virtual doors. In an announcement, the company said it is discontinuing its e-commerce operations and ending its used car business and will lay off 800 employees. 

“We announced January 22nd, 2024, that Vroom has halted all purchases and sales of used vehicles,” the company said in a statement. “We are discontinuing Vroom's e-commerce operations and winding down our used vehicle dealership business. It has been an honor to serve car buyers and sellers all over the country.”

The company said its subsidiaries, United Auto Credit Corporation (UACC) and CarStory, will continue to serve customers and focus on growing those businesses.

Vroom was one of the virtual car dealers that benefitted during the pandemic when buyers were more comfortable ordering a car to be delivered to their homes, rather than visiting an auto showroom. Karl Brauer, executive analyst at iSeeCars.com, says operating a retail car business, even one that is completely online, is more expensive than it looks.

Money and people

“Buying the cars, insuring the cars, storing the cars, processing the paperwork, all of it requires money and people,” Brauer told ConsumerAffairs. “Many of these e-businesses assumed not having physical dealerships would save them enough money to have an advantage over traditional dealers. 

“But that is only one component of selling cars, and you still have to build awareness and attract buyers in the face of dealerships with a physical presence. Not having a showroom to display cars and offer test drives are disadvantages, even if it saves operating costs. Ultimately, selling cars through a sustainable, profitable business model is more expensive and more challenging than Vroom realized.”

If other consumers, like Jason, of Clarksville, Tenn., had a similar experience, Vroom’s fate is perhaps not all that surprising.

Unhappy customer

“[On]12/28/23 my deal was finalized and now I have to wait 14 days to get my car?” Jason asked in a ConsumerAffairs review. “The car was only 327 miles away. It didn’t take 14 days to get my money or the paperwork from me. I called them and was just given a runaround saying it’s their policy and they need to inspect the car. Okay, you don’t inspect them when you receive them? I’m about to cancel my deal and take my money elsewhere.”

Vroom was established in 2013 but, under new ownership, shifted to its online sales model a year later. The company went public in 2020 and, at its peak was valued at $8.1 billion.

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