Vroom is winding down its eCommerce operations and discontinuing its used vehicle dealership business.
The company aims to preserve liquidity and maximize stakeholder value through its remaining businesses, Vroom said in a Monday (Jan. 22) press release.
This move comes after the company tried to raise additional capital and extend its vehicle floorplan facility past its current expiration date of March 31, Vroom CEO Thomas Shortt said in the release.
“Despite significant efforts to do so, we ultimately were unable to raise the necessary capital in the current market,” Shortt said.
While winding down its eCommerce platform for buying and selling used vehicles, Vroom will focus on its other ventures, including automotive finance company United Auto Credit Corp. (UACC) and CarStory, a provider of artificial intelligence (AI)-powered analytics and digital services for automotive retail, according to the release.
UACC and CarStory will continue to serve their third-party customers and concentrate on expanding those businesses, the release said.
A Value Maximization Plan approved by Vroom’s board of directors outlines the steps the company will take to wind down its eCommerce operations, per the release. This includes suspending transactions through vroom.com, selling its current used vehicle inventory through wholesale channels, halting purchases of additional vehicles, and implementing a reduction-in-force that aligns with the reduced operations.
Vroom plans to lay off 800 employees — 90% of those not engaged with UACC or CarStory — according to its Monday filing with the Securities and Exchange Commission (SEC).
The company expects this Value Maximization Plan to be largely implemented by March 31, the filing said.
“Although we were unable to raise the capital necessary to achieve profitability in our eCommerce operations, we are committed to responsibly managing our remaining businesses and prudently deploying our capital as we seek to maximize value for all of our stakeholders,” Robert Mylod, independent executive chair of the board, said in the release.
Profitability has been volatile, and sometimes elusive, for online car platforms, PYMNTS reported in November. Inventory has been aging and interest rates have been high.
In response to this challenging economic environment, digital automotive platforms have been adding features and cutting costs in a bid to stay afloat.