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http://fortune.com/2015/07/20/vroom-raises-54-million-to-turn-used-car-dealers-into-dinosaurs/ New York startup Vroom has raised $54 million to cut out old school auto dealers and let consumers buy (and finance) a used car via smartphone in just a few minutes. In short, Vroom wants to make buying or selling a used car as quick and painless as ordering an Uber. We want these transactions to be made truly in a matter of minutes, CEO Allon Bloch told Fortune. Were trying to create the opposite experience of going to a dealership, where you have to negotiate the price and there are all these hidden fees. Catterton, which backed Restoration Hardware and P.F. Changs, led the Series B funding round. General Catalyst Partners, the same venture firm that bankrolled Snapchat, Warby Parker, and Kayak, also invested in Vroom. Other investors in this latest round include T.Rowe Price Associates, Jeffrey Boyd, the chairman and former CEO of The Priceline Group, and Bob Mylod, former CFO of The Priceline Group. The company previously raised $19 million in equity from between 15 and 20 wealthy investors, including former pro football player John Elway and former Autonation and Blockbuster CEO Steve Berrard. Unlike other online car retailers that create a marketplace for people to sell cars to each other, Vroom handles the entire transaction. The company takes possession of the used car from the seller, reconditions it, and then delivers it to the buyers door. Vroom does have competition in online car sales space. Shift Technologies and Beepi Inc. are raising capital and expanding staff. And each startup offers its own spin on white-glove or concierge-style service. Capital raised in this latest round will help the company complete that last mile of delivery, Block says. Right now, the company is sometimes forced to use a third-party service to transport cars from its Dallas, Texas reconditioning facility to customers. The company plans to add more of its own vehicles, known as three-car haulers, to its inventory. This has the added benefit of having our people hand over the paperwork to the consumer and go over the car in person, Bloch says. The new funds will also be used open three-to-four more reconditioning/fulfillment centers over the next two years to be able to deliver cars within 24 to 48 hours. It takes two to four days to deliver cars purchased via Vroom right now. Bloch wouldnt say where these facilities would be located. However, he did say that theyll be near major urban centers in the U.S. The first one will open by the beginning of next year. Each one of these facilities will house between 2,000 and 3,000 vehicles and employ close to 100 people. An online retailer that sells used cars, sight unseen might seem like a risky business model. But Bloch says, despite some early concerns, it hasnt been hard convincing consumers to use the site. The company had nearly $20 million in sales in May and is on track to reach $300 million in 2015. Bloch says they continue to see month-over-month sales growth and will likely double their number of employees to about 300 by July 2016. He credits the companys 7-day free of charge return policy for quickly building trust in a business that is only two years old. Bloch insists Vroom has an extremely low return rate, in large part because the policy forces the company to reconditions its cars to a high standard. This is essentially an extended test drive, Bloch says. Most of the time when you test drive a car, its for a handful of minutes. The dealer is sitting in the car there with you, blaring the speakers, talking to you, and youre under pressure. You dont have time to seriously consider the car. Next month, Vroom plans to integrate the financing component online. Currently buyers seeking financing must arrange it through the companys call center. I work in the automotive industry, and I spent about an hour discussing the future of brick and mortar dealerships as we continue to move towards nearly all retail purchases being made online. It almost seems inevitable, as 15 years from now the kids in grade school and high school, who spend the majority of their days online, growing up into adults. With the amount of information available these days in regards to purchasing a vehicle, consumers can research all the equipment a vehicle comes equipped with, profession and personal reviews, and pricing before they step foot in a dealership. The argument was made that with enough information on hand, and the convenience of having your car of choice delivered to your door, the need for visiting a dealership to purchase a vehicle will become a thing of the past. If this becomes as successful as some speculate, we may even see manufacturers try to do business directly from the factory again, which would effectively eliminate the car dealership as we know it. In my opinion, purchasing a vehicle is like buying clothes for me. I may know what I want, but until I can "try on" a car in person I can't feel comfortable making a buying decision. The seeing, touching, plus the human element of having someone who's hopefully a knowledgeable professional teach you about the vehicle is too important to enough people to shift the way business is done in the automotive industry. But that's my opinion, who knows how the next generation will feel when they grow to have significant purchasing power. Hopefully you guys can share your thoughts on the future of the automotive industry with the growing popularity of online business.
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Aug 21, 2016 04:52
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gently caress dealerships. In the new car market they exist mostly as a middleman who wants a cut to tell me they can't get the package of options I actually want without tacking on another 10% of cost in fees. The day I can just order a car to spec from the manufacturer and get it at my door will make me much more likely to buy something manufactured this century.
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Aug 21, 2016 06:25
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The reason why Vroom may or may not succeed has nothing to do with being online - their business model is about the quality of cars you can get, rather than the ease or on-lineness. Car dealers aint going anywhere for a while yet, exactly like dinosaurs actually still exist today and in actual large numbers, we just call em birds.
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Aug 21, 2016 06:35
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I was listening to a planet money podcast and they were discussing how the dealership model is protected by law in many states and pretty much won't/can't be changed due to massive lobbying. The only way you're going to get approaches like this off the ground is when they partner with specific dealers, like Costco does. I think this was it: http://www.npr.org/sections/money/2013/02/19/172402376/why-buying-a-car-never-changes http://pd.npr.org/anon.npr-mp3/npr/...layer=true&dl=1 e: For new cars, I'm talking about, not used obviously. slidebite fucked around with this message at 18:11 on Aug 21, 2016 |
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Aug 21, 2016 18:05
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Used car dealerships have already folded a ton, smaller new car dealerships died in 08. The large players are going to exist a few decades more, at least. You'll see a straight up manufacturer run dealership network long before you see a fully online auto market. I just got out of the auction business after nearly 17 years.
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Aug 21, 2016 18:24
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Also, the number one reason new car dealerships exist is as a storage area for manufacturing overflow. So you'll always have depots of new cars spread out across the land, simply due to the logistics of transporting automobiles.
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Aug 21, 2016 18:27
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[quote="VikingSkull" post="46341 I just got out of the auction business after nearly 17 years. [/quote] drat any reason in particular?
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Aug 21, 2016 18:30
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What's a dealership? dodges shoe
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Aug 21, 2016 18:31
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Preoptopus posted:drat any reason in particular? well it was close to a year ago, I was just burnt out on dealing with scumbags left and right
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Aug 21, 2016 18:54
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Healthy Nut Snack posted:With the amount of information available these days in regards to purchasing a vehicle, consumers can research all the equipment a vehicle comes equipped with, profession and personal reviews, and pricing before they step foot in a dealership. The argument was made that with enough information on hand, and the convenience of having your car of choice delivered to your door, the need for visiting a dealership to purchase a vehicle will become a thing of the past. If this becomes as successful as some speculate, we may even see manufacturers try to do business directly from the factory again, which would effectively eliminate the car dealership as we know it. Dealerships do not know a goddamned thing about the cars they are selling in every. single. interaction. I've had with them in my adult life. They just don't. Granted where I am posting and the kind of people my wife and I are but when I go to a dealership and I start asking questions and the knowledge I have surpasses the salespersons (and does it immediately!) that I'm supposed to be getting answers from poo poo is hosed. Pile that on with rare things like the time I went to go test drive an 500 Abarth when they were new and drove my brand new Golf R to the dealership. The guy there treated me like I was some kid (I was 29) wanting to hot rod a car with no intent to buy when I pulled up in a more powerful, more expensive car and refused to let me test drive it. I didn't understand it, asked the dude what his reason was and he said "What would you say if you knew your car had been test driven and hot rodded?" Lmao dude I just bought this Golf R do you really think it was treated nicely with white gloves and the utmost care and not test driven? Burn all dealerships down basically.
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Aug 21, 2016 18:54
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Dealerships are already getting set to gently caress off for different reasons. Dealerships wrote the laws to say manufacturers can't sell directly to customers. They don't say manufacturers can't set up ridesharing services with self driving cars. You won't buy a car from a manufacturer, you'll subscribe to a manufacturer. You won't own a car, but one will be outside when you need it. There won't be used cars. They'll live their life out in the service of the manufacturer or ride-sharing service and be recycled. so, RIP OEM dealerships, used car dealerships, non-OEM service centers, taxi companies, insurance companies, body shops, gas stations and parking lots.
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Aug 21, 2016 19:01
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Liquid Communism posted:gently caress dealerships.
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Aug 21, 2016 19:25
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KakerMix posted:"What would you say if you knew your car had been test driven and hot rodded?" Lmao dude I just bought this Golf R do you really think it was treated nicely with white gloves and the utmost care and not test driven? My car's Track Apps recorded 1.02g and 0.98g of peak cornering force recorded before I even bought it.
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Aug 21, 2016 20:14
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oRenj9 posted:My car's Track Apps recorded 1.02g and 0.98g of peak cornering force recorded before I even bought it. Probs from the Russian truck driver who hauled it to the dealer.
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Aug 21, 2016 23:09
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Seems similar to what Beepi is doing. And yes, gently caress dealerships forever.
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Aug 22, 2016 00:02
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Used car dealerships are cheap they can just get a license in each state. They did not have the car I wanted to buy though.
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Aug 22, 2016 01:26
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Just gonna chime in to say dealerships make most of their money fixing cars and employ techs... Whose gonna fix your car under warranty when you buy it with a phone. Ship it to Texas?
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Aug 22, 2016 02:11
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Preoptopus posted:Just gonna chime in to say dealerships make most of their money fixing cars and employ techs... Whose gonna fix your car under warranty when you buy it with a phone. Ship it to Texas? They're used, so probably local independents or the new car dealerships. If this model eventually replaces regular dealerships then the facilities you pick your car up at will have to also have a manufacturer run service center.
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Aug 22, 2016 02:31
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Preoptopus posted:Just gonna chime in to say dealerships make most of their money fixing cars and employ techs... Whose gonna fix your car under warranty when you buy it with a phone. Ship it to Texas? It's the sales part of the equation that stinks, not the service and parts departments.
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Aug 22, 2016 03:12
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To elaborate on why I say gently caress dealers, a short story from my own life. I've been trying to replace my rusted-out XJ with an econobox for communting since work has been shifting me around between sites. Unfortunately, I want three things. 1. A base model without any bullshit navigation packages or appearance packages. 2. A manual transmission. 3. A color that is not white. This is apparently an impossible request. The sole thing that any dealership within 100 miles of me stocks in manual are sports cars and the occasional diesel truck. Every last one I've asked has wanted fees equating to ~10-15% of the MSRP to order what I want, if they're even willing to do so. There is no loving point to having to purchase through dealerships if they cannot get you 90% of their lines.
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Aug 22, 2016 05:52
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Liquid Communism posted:To elaborate on why I say gently caress dealers, a short story from my own life. Pretty sure a fleet dealer through costcoauto.com can hook you up with what your asking
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Aug 22, 2016 05:58
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IOwnCalculus posted:Seems similar to what Beepi is doing. And yes, gently caress dealerships forever. I think beepi is a lot bigger too Beepi is tempting because of the extended test drives, but the prices are not that appealing to me. Maybe its the bay area price effect but something a two year old audi s3 is a whopping 10% off of invoice. Their margins must be huge on these cars. On top of that they have a "love dents" chart and all the cars on beepi have like 200 loving scratches/dents on them. I imagine their business model relies solely on "Let them test drive for a week and they wont want to give up their new car because people are impulsive AND complacent/lazy!" I would only use beepi for their test drives, drive the piss out of the car, return it no matter what, and if i still yearn for the car a week later then i would probably wait for one to pop up on craigslist private party (or in the case of an audi s3 just buy it new because the incentives and invoice make them really cheap right now)
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Aug 22, 2016 06:11
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Liquid Communism posted:To elaborate on why I say gently caress dealers, a short story from my own life. Have you looked at Hyundai? Plenty of what you are looking for is available in my small town Hyundai dealer for $13-14k new (manual not white no nav) Also Nissan Versas are in abundance here and they even have manual windows! 11-14k
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Aug 22, 2016 16:46
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coolskillrex remix posted:I think beepi is a lot bigger too I think you're conflating two different issues--prices for 1-3 year old used cars aren't much lower than new cars, due to factory incentives. Secondly, beepi offers prices that are the same coast to coast, the only difference is the price of shipping it to you. And i think that beepi seems competitive for the few CX-5's ive been looking at. the used prices for these cars at dealerships are insane.
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Aug 22, 2016 17:03
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BraveUlysses posted:I think you're conflating two different issues--prices for 1-3 year old used cars aren't much lower than new cars, due to factory incentives. I don't know, I picked up a 3 year old used car a couple months ago for half what it was new.
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Aug 22, 2016 17:34
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Disgruntled Bovine posted:I don't know, I picked up a 3 year old used car a couple months ago for half what it was new. It's not a firm rule and historically I would expect to see what you got, but there's a lot of weird prices out there for 2-3 year old cars.
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Aug 22, 2016 17:57
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Liquid Communism posted:To elaborate on why I say gently caress dealers, a short story from my own life. Out of curiosity, where are you? I can find a lot of inventory that meets your description in my local market area. Dealers hate stocking manual transmission stuff because it doesn't sell, and they don't want to use an allocation of new vehicles on a car that is relatively low margin (yes, this is short-sighted and driven by OEM allocation policies...)
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Aug 22, 2016 18:27
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So I've been checking out this Vroom and Beepi stuff some more and their prices aren't as good as Carmax, who also does no hassle pricing and gives you a nationwide inventory to choose from (with maybe some shipping cost). I think that if these services really want to take off they're going to have to find a way to make the cars cheaper.
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Aug 22, 2016 19:29
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Powershift posted:
 I've worked in sales at a dealership for new and used and I never once felt as though my job was creating a net benefit to society. Car salesmen exist solely to extract money from what should be a basic process and it doesn't surprise me that on-line services like this will succeed. Although I agree that the will be some time away. I recently had a good experience through a leasing scheme at my work. A finance company sources the brand new cars and includes the cost of servicing, insurance, road tax, tires etc into one monthly cost with no initial deposit. The only out of pocket expense is fuel. You can select any new car that emits up to 130g of CO2 using their on-line portal and all the options are the same as if you went to a dealer directly. I worked out that over a 3 year period it was cheaper to go with the lease scheme rather than out-right buy a 5 year old car. (after 3 years the used car was cheaper obv.) My only issue is I still had to go to a dealership to test drive, but that was purely optional and if not for that, a dealership would've played no part in the process. I think this sort of leasing program is a good middle step and it demonstrates how easy buying a car is. I also think we'll probably see an expansion of the car configuration aspect of manufacturer websites to include on-line financing and purchasing.
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Aug 22, 2016 20:26
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It has seriously always boggled me how in the gently caress in this day and age of modern technology and the internet how in the gently caress dealerships still exist and manage to be successful. I flat out refuse to talk to salespeople ever. They are all loving worthless and don't know a goddamn thing about the products they are selling. I don't need a loving coked up high school dropout "getting me a killer deal". You don't have loving dick in the way of actual power you loving plebe, stop wasting both of our time and get me your finance manager so I can talk to the real loving adults and not have to deal with the back and forth bullshit. Also, gently caress all of your goddamn fees and financing tricks. Once you give me an honest to god out the door price I'm whipping out a blank cashier's check and filling in the amount and paying for it on the spot and I swear to god if you try to change the terms on me I will loving wreck your poo poo and your day. It's a complete loving farce that manufacturers have let these loving jagoffs jerk them around and bully them into this goddamn pyramid scheme of a lovely business model that is the modern dealership. If goddamn Amazon and eBay have managed to figure out internet sales then the auto makers should loving wake up and realize that dealerships do nothing for them besides pissing off their current and potential customers. Holy poo poo if I could actually go to a manufacturer's website and pick the car that I want, with the options I want, and not have to step foot into a dealership, I'd be throwing money at them every 4-5 years. If the manufacturers were smart they'd loving pull all their dealership licenses, let these assholes rot, and setup service centers for their own models and that's it. If your car has a problem or needs service, you take it to a manufacturer's designated service center where actual certified mechanics that know what the gently caress they are doing fix your poo poo. I can't wait for the day where all these assholes that have managed to get laws passed blocking direct manufacturer sales eat the giant bowl of dicks that is coming to them. The internet generation and millennials don't want to have to talk to a goddamn person about buying a car. They want to order it like an Apple product and have that poo poo delivered to their door and the less human interaction the better.
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Aug 22, 2016 21:05
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look i completely agree with everyone except car dealers that the franchise dealer model is not good for the end customer in 2016 but you guys realize that the franchise dealership model exists as a throwback to like 1912 or whatever when you literally couldn't do what Amazon and eBay have done (let alone afford capital for dealerships or the communications tools to staff and manage them) and now as a result of the success of the automobile in america you have this very politically powerful extraordinarily wealthy group of middle men, some of which are actually massive publicly traded companies, that have a vested interest in maintaining the status quo
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Aug 22, 2016 22:22
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KYOON GRIFFEY JR posted:you have this very politically powerful extraordinarily wealthy group of middle men, some of which are actually massive publicly traded companies, that have a vested interest in maintaining the status quo you pretty much described half of the current problem in america BlackMK4 fucked around with this message at 22:37 on Aug 22, 2016 |
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Aug 22, 2016 22:35
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KYOON GRIFFEY JR posted:look i completely agree with everyone except car dealers that the franchise dealer model is not good for the end customer in 2016 but you guys realize that the franchise dealership model exists as a throwback to like 1912 or whatever when you literally couldn't do what Amazon and eBay have done (let alone afford capital for dealerships or the communications tools to staff and manage them) and now as a result of the success of the automobile in america you have this very politically powerful extraordinarily wealthy group of middle men, some of which are actually massive publicly traded companies, that have a vested interest in maintaining the status quo So what I'm hearing is the guillotine needs to make a comeback.
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Aug 23, 2016 00:59
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KYOON GRIFFEY JR posted:Out of curiosity, where are you? I can find a lot of inventory that meets your description in my local market area. Central Iowa. Plenty of trucks, and some Darts and Jeeps, but that's about it. I haven't really looked at Hyundai, I should check that out.
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Aug 25, 2016 04:44
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KYOON GRIFFEY JR posted:look i completely agree with everyone except car dealers that the franchise dealer model is not good for the end customer in 2016 but you guys realize that the franchise dealership model exists as a throwback to like 1912 or whatever when you literally couldn't do what Amazon and eBay have done (let alone afford capital for dealerships or the communications tools to staff and manage them) and now as a result of the success of the automobile in america you have this very politically powerful extraordinarily wealthy group of middle men, some of which are actually massive publicly traded companies, that have a vested interest in maintaining the status quo Amen. What gets me is that the  free market god bless compertition good ol' boys always seem to fight competition with litigation.
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Aug 25, 2016 09:54
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BraveUlysses posted:It's not a firm rule and historically I would expect to see what you got, but there's a lot of weird prices out there for 2-3 year old cars. used (and new) car prices are heavily dependent on type of car and region I got my Ram for way less than list because it was the end of the summer and it is 2WD and I live in NY.... they wanted that thing gone ASAP
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Aug 25, 2016 14:35
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Huge_Midget posted:So what I'm hearing is the guillotine needs to make a comeback. As nice as that seems it throws the economy into a tail spin which eventually leads to new middle men filling the roles. There is no free cake to eat. If you truly believe the mob is less self serving then a few rich aholes you are mistaken. Someone needs to ad order to the chaos.
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Aug 25, 2016 15:22
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The only real reason I can think of for dealerships sticking around is for test drives. There's no way I'd buy a car, any car without getting a chance to sit in it first.
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Aug 25, 2016 16:28
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ExplodingSims posted:The only real reason I can think of for dealerships sticking around is for test drives. There's no way I'd buy a car, any car without getting a chance to sit in it first. Do tell! 
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Aug 25, 2016 16:32
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In CA, I don't see how Vroom would even work with their "we'll deliver it to you" model. In CA, taking delivery of the vehicle is defined as driving it off the dealership/car lot. This is even before the mandatory 1 month/1000 mile used warranty.
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Aug 25, 2016 16:44
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