Vroom Inc., an online used-vehicle dealer based in Houston, has hit the skids, announcing plans to shut down its e-commerce operations and skip town on vehicle sales. A desperate attempt to preserve cash liquidity amid financial turmoil. Vroom plans to offload its existing vehicle inventory wholesale, cutting loose the bulk of its workforce, axing 800 jobs or about 90% of its employees, as per a statement obtained by Automotive News. Customers expecting to buy or sell cars via Vroom are running out of gas if they haven't already crossed the finish line with a signed contract.
Vroom's shares nose-dived following the announcement, dropping like a stone by 51 percent to a meager $0.25 in after-hours trading. CEO Tom Shortt, in a news release, spelled out the grim predicament. "Despite significant efforts to do so, we ultimately were unable to raise the necessary capital in the current market," he lamented. "Obviously, we are very disappointed with this outcome," CEO Tom Shortt said in the statement as noted by Houston Chronicle. On remaining tracks, Vroom will keep its United Auto Credit Corp., an in-house financing arm, and CarStory, an AI-driven analytics and retail digital service platform, running. The layoffs won't leave skid marks on these subsidiaries.
Vroom, which hit the scene in 2013 and shot up to a $2.5 billion valuation by the time it went public in 2020, has since grappled with a series of roadblocks. Just last year, it was caught in a legal jam with a Texas lawsuit for deceptive trade practices and agreed to cough up $3 million, including $2 million in civil penalties and $1 million in legal fees. Vroom's traction with customers eroded due to their shady sales behavior, to such an extent that they were accused of peddling vehicles without clear titles and leaving customers in the dark about potential registration delays. Vroom did not immediately respond to an inquiry about the layoffs mentioned in the Houston Chronicle.
Following the announcement, Vroom put up a FAQ on their website, steering customers who already have contracts to their support line for the next steps. In its last earnings call, Vroom reflected on a rough quarter, with a net loss of $82.9 million. A sales slump dragged down revenue 31 percent to $235.6 million. Plunging profits per vehicle and dropping e-commerce vehicle sales show the company's engine was cooling off long before this week's stall-out. This detour puts Vroom alongside Shift Technologies Inc., another online car dealership that filed for bankruptcy after consecutive quarters in the red, as reported by Automotive News.
