AutoNation sells Vroom stake after plans fizzle

After two-plus years, AutoNation Inc., the largest new-vehicle retailer in the U.S., sold its stake in online used-vehicle startup Vroom Inc. because the companies "were doing nothing together."

That account came from AutoNation CEO Mike Jackson last week to explain why the retailer sold its shares in Vroom in the fourth quarter of last year and early first quarter of this year, netting $215 million and $165 million cash gains on its $50 million investment made in October 2018.

Jackson said AutoNation had wanted a partnership with Vroom and "synergistic common grounds to work together, whether that was in our expertise, reconditioning, digital, whatever."

"Well, none of that worked out," Jackson said after AutoNation announced higher fourth-quarter earnings. "And so then it became purely an investment, which is really not what we intended. ...We decided to declare victory and move on."

Jackson in fall 2018 called the stake in Vroom, which represented 7 percent of the startup at that time, an investment but also said it could lead to a strategic partnership.

Vroom, which went public in June 2020, didn't respond to questions about its relationship with AutoNation.
AutoNation and Vroom did have a business arrangement for a time. AutoNation's Anand Rao, senior vice president of digital product and innovation, was on Vroom's board from January 2019 until May 2020, according to his LinkedIn profile. Vroom, in a regulatory filing, said it struck a vendor agreement in January 2019 with AutoNation for vehicle reconditioning and repair services. Vroom paid AutoNation about $1 million in 2019 before the agreement was terminated in February 2020. It's unclear why the contract was canceled.

Vroom continues "to utilize a mix of owned and third-party reconditioning facilities and [is] regularly assessing new partnerships to support our asset-light strategy," a Vroom spokesperson wrote in an email to Automotive News.