Vroom Inc. is aiming to be the top seller of the used cars online, and it has boosted that attempt with a fund raise of $50 million in some Series E equity funding. The amount brought up its total of funds raised to $218 million. The market for used cars in the US is believed to be around $4 billion annually and a report by Edmunds.com Used Vehicle Market Report showed that almost 38.3 million cars had been sold by retailers in 2015 alone. The cars were sold at an average price of $18,500.
Vroom Inc. started back in 2013, and the founders said the company was a stress free way for people to sell and buy their pre-owned vehicles online and through their mobile phones. The current CEO of the company, Paul Hennessy joined the company this year in June and in his previous capacity was the CEO of the Priceline.com. He said that there were similarities with the issue of online travel agencies and Vroom.
Comparing the two, he said that the two markets were fragmented and they all had competition both online and off it. He also acknowledged that companies such as Vroom could put some dealerships of out business.
Speaking to reporters he said that the company’s job was to assemble inventory for its customer, and give them a fresh and great shopping experience via their mobile devices or online. They can finish the paperwork without any problems and issues such as paperwork, and the constant haggling. The car is also delivered to the front door making it easy.
After receiving the car, the buyers will get at least seven days to test drive their car. Hennessy said that he was envisioning making car buying as simple as buying and returning a pair of shoes.
For sellers of cars, buyers could simply upload photos of their cars together with the VIN number through the smartphone app. After that they get a quote from Vroom and after that, they can get their cars picked up. Proprietary algorithms and data are used in valuing the different cars and the trucks in their different conditions. A huge repairs and refurbishing operation is also available at Vroom, Texas Direct Auto, an operation they acquired last year.
The revenue for Vroom comes from the sales of pre owned vehicles for the individual consumers and the rental car companies. The company also makes money by selling scrap materials they get from the vehicles which can’t be fully repaired. It also gets revenue from the arrangement of auto loans and the selling warranties they impose.
With the change of the auto market lately, Hennessy said that his company always looked to put the consumer at the focal point of everything. Consumers should be in the best car they can afford and for the price they want to pay, he said. The company faces competition from other auto website firms such as Carmax, TrueCar, and Ebay Motors and some classifieds sites such as Craigslist, Carfax.
However, Vroom also has some partnerships with some of the competitors such as Ebay.
