Following a tumultuous exit from the online used car space, the CEO of what was Carvana's (CVNA) largest competitor says that shutting down its online marketplace was the hardest day of his career.
Related: 'TikTok generation' is getting enticed with Chinese EV brands
Vroom (VRM) CEO Thomas Shortt said that the decision on January 2024 to shut down the operations that let customers buy and sell used cars was one they were led to make in order to save the company's liquidity and value, according to a recent interview with Automotive News,.
By this time, the CEO was aware that Vroom was not able to obtain enough outside capital needed to grow its online used car operations. As per Shortt, they had two options: either wait it out until March 2024, when tax return money hits auto shopper's bank accounts, or call it quits and liquidate all the remaining inventory.
Vroom took the latter option, and according to Shortt, it made the most economic sense and preserved the most of their remaining cash.
"We had already done that math before we got to that point," Shortt told AutoNews.
View the original article to see embedded media.
After joining Vroom in 2022 as its COO, Shortt says that the decision on Jan. 22 was "gut-wrenching," especially since he led a plan to scale back the company's sales growth in an effort to focus on long-term profitability in the online used car retail business.
The current Vroom CEO said that it was hard to face reality and share the bad news with the people who would have been able to achieve the goals in his plan.
"What weighed on me a lot was telling all of our people," Shortt said. "I mean, that was the hardest day of my entire career — January 22."
Vroom's online used car sales exit was not an easy one.
On the days that followed Vroom's exit from the online used car marketplace, many buyers who were in the process of getting their own set of wheels saw that communication had gone dark since the Jan. 22 announcement.
In a report conducted by NBC's Houston affiliate KPRC, two women from different parts of the country came forward saying that they were not receiving any updates from Vroom on vehicles they paid down payments for since the shutdown.
One of the women — Kerra Wade of Indiana told the affiliate that she found it difficult to find the status of a recently purchased car through Vroom's app, which has left her uneasy.
“I just feel very, overwhelmed. Distressed," Wade told KRPC. "I’m a single mother... I don’t just have cash to just be purchasing cars and things like that.”
In Connecticut, Lynn Ruggieri was also left in the dark.
“I’m worried that I’m going to lose my money and... not have a car. And I don’t have a car right now. I can’t get a hold of them. I don’t have a car, and I don’t have my money."
The complaints made by the two women were far from the only ones made about the company that supposedly made used car buying 'easy.' When Vroom was still in business, many customers have shared horror stories such as the company's slow buying and delivering process, as well as receiving cars that were in worse condition than what was perceived on dedicated Facebook groups and on Reddit.
Additionally, in December 2023, Vroom settled a $3 million deceptive trade practices lawsuit brought by the Texas attorney general in April 2022.
More Automotive:
- BMW exec says it's the end of the line for a popular option among car enthusiasts
- Mercedes just took a subtle dig at its biggest luxury rival
- Ford is taking away a convenient feature because no one uses it
Today, Vroom does not sell cars, but its CEO likes to say it is still in the industry.
The company still owns CarStory, a business that provides AI-powered analytics and digital retail services to dealers and auto finance companies. It also owns United Auto Credit, a credit lender that is mostly aimed at customers with subprime credit scores.
"I think the way to think of this is, we were always an automotive company, and we're still an automotive company," Shortt said. "We're just not buying and selling cars anymore."
Related: Veteran fund manager picks favorite stocks for 2024
