The acquisition and integration of United Auto Credit Corp. as a captive lending arm should lead to more sales and higher profit per vehicle, according to Vroom executives.
That will be accomplished with a broadening of both the online used-vehicle retailer's customer base and the vehicles it sells.
One way to analyze Vroom's $300 million cash deal for the nonprime lender, announced last week, is by checking out how larger, more established rival Carvana has been handling captive financing — it has its own in-house financing arm. Vroom executives didn't say that, but they concurred when asked by an analyst during a conference call whether it was a fair comparison.
"The model that we're implementing is quite similar to theirs," Vroom CFO Bob Krakowiak said.
Vroom has to close on the purchase and then transition UACC into a captive financing arm.