Carvana's largest rival exits the online used car business

The former online used car retailer will retain its internal financial unit.

Jan 24, 2024 - 04:30

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Carvana's largest rival exits the online used car business

It is the end of the road for an ambitious retailer selling used cars online.

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Online used car retailer Vroom (VRM) - Get Free Report announced in a statement on Jan. 22 that it will be exiting the space, suspend its buying and selling of cars and will sell off its remaining inventory through wholesale outlets. In addition, the company will begin laying off employees in an effort to save its liquidity.

Vroom CEO Thomas Shortt said in a statement that though the company failed to raise necessary capital in order for it to operate, he is proud to see what the company has achieved over its two-year run.

"Obviously, we are very disappointed with this outcome," said Shortt. "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,"

Vroom said that its finance arm, United Auto Credit Corporation, will continue to operate, as well as its AI-powered information hub CarStory.

*A Carvana vending machine in Daly City, Calif., on Thursday, July 6, 2023.*
Bloomberg/Getty Images

The Carvana (CVNA) - Get Free Report rival has been operating in the red for some time. According to a report by Automotive News, Vroom sold only 4,561 cars during Q3 2023, down 29% year-over-year. In the same quarter, the company only made $3,144 per vehicle, down 25% and contributing to a loss of $82.9 million after losing $51.1 million during Q3 2022.

The fall of Vroom marks the second used-car online retailer to fall to financial hard times within the past few months. Another Carvana rival, Shift filed for Chapter 11 bankruptcy in October 2023.

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