Vroom is an online used car platform that went public not too long ago. Given my 15+ years in automotive experience, some friends asked what I think of them. And again, because I apply for random jobs often for fun, I had a chance to speak to numerous people there at Vroom. And Carlotz ($LOTZ). And Carvana ($CNVA) and Shift ($SFT) where they are all online platform to sell used cars. For the interest of our time, I will only talk about Vroom today.
Believe it or not, there is a school of thought that when you deliver amazing sales experience, you will make more money in automotive experience. Then customers are more like to buy F&I products from you (a lot more lucrative than selling cars) and they will come back to repair their cars (also very lucrative) but most dealerships don’t do this well? Why? Let’s not open up that can of worms but those who are interested, here is an article from McKinsey & Company
The bottom line is that only few understands the importance of CX (customer experience) and often, executives like Carl Liebert who supports improving customer experience in automotive industry gets ousted.
So what does this have to do with Vroom ($VRM)? And why is Vroom’s stock performance so dismal compared to Carvana ($CVNA)?
Answer: Customer Experience. And their inability to bring in someone who is an expert but rather giving it to someone who has zero CX experience and deprioritizing it. Yes, this is why people don’t want to buy cars from Vroom. Hence, the stock is doing so poorly when all the car dealers selling used cars are all of sudden so profitable.
I believe the stock will continue to head down and I have made a boat load of money betting against the company since the IPO. But I will change my view and start investing in them once there is a change in the upper management especially with their CX leadership. Then I think it might be a buy. Again, do your DD before making any investment decisions.
And for those interested in my take on $LOTZ, $AN, $CVNA and $SFT, drop me a note. If there is enough interest, I will share my view on them.
Ernie, read your article on VRM. I am not in it but do own quite a bit of LOTZ. Hoping you will offer your take on LOTZ. Thanks for the reading!
Simon, I will be posting an article about Carlotz ($LOTZ) so come visit out site again.