AutoNation Inc.'s $50 million investment in Vroom Inc., an online used-vehicle retailer, could lead to a strategic partnership, CEO Mike Jackson said. But the company isn't committing to that yet.
"I like to create different paths to success, and I think this investment in Vroom is a possibility," Jackson said. "But for today, it's an investment."
The investment, announced last week, gives AutoNation a 7 percent stake in Vroom.
Jackson: For now, an investment
"It may be that we talk a year from now, and I say, 'It was a good investment.' And that's it," Jackson told Automotive News. "On other hand, it could be more. I just don't know the answer to that question today, but I'm excited to go down the road and see."
Jackson compared the investment to the company's relationship with Waymo, Google's self-driving car unit. Last year, AutoNation signed a multiyear agreement to provide maintenance and repairs for Waymo's fleet of self-driving Chrysler Pacifica hybrids. The partnership has since expanded. Now AutoNation offers some of its customers a ride in Waymo vehicle instead of a loaner during service appointments.
Hennessy: "A love for cars"
With Waymo, "we're in an investment period where we are creating capabilities that we think build a relationship and demonstrate what we bring to the table," he said. "That's going very well, and I think will lead to good things. I still can't define that for you exactly."
The Vroom investment establishes a foundation for potential strategic partnership opportunities with experienced e-commerce executives, AutoNation said in a statement.
Vroom CEO Paul Hennessy was previously CEO of Priceline.com and chief marketing officer of the travel website Booking.com.
"His credentials in the tech digital space are extraordinary," Jackson said. "He has a passion and a love for cars and the business that's very genuine and very authentic."
Vroom has offices in New York City and Houston.
In addition to the Vroom investment, AutoNation operates an online car-buying platform, AutoNation Express, launched in 2014. At the time, Jackson said customers would be able to finance and buy a vehicle online and sign paperwork electronically by the next year, but delivering on that promise has taken longer than expected.
In March, executives said AutoNation customers still couldn't complete a transaction online, but the company was testing remote signing for some paperwork. Consumers could reserve a vehicle through the website and calculate monthly payments based on a credit score they entered. The information entered online is fed into stores' dealership management systems.
AutoNation also owns AutoNation USA, a group of five used-only stores.
Asked how Vroom could tie into AutoNation Express, AutoNation USA or both, Jackson said that's in the "we will see category."
"Potentially it could be more," he said, "but all that will take time and work to see if there are things that make sense for both companies."
AutoNation isn't the first public dealership group to invest in an online used-car retailer. Lithia Motors Inc. said in September that it invested $54 million in startup Shift Technologies, becoming Shift's largest shareholder.
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