By Nick Carey
(Reuters) – Online vehicle seller Vroom Inc is seeing more demand for used cars “than we can currently fulfill” due to the coronavirus pandemic, with a 20% increase in demand in U.S. cities that may indicate people are buying cars as they migrate to the suburbs, the company’s top executive said on Thursday.
“Even with an uncertain stimulus package, even with current unemployment levels, the demand is really strong,” Vroom Chief Executive Paul Hennessy told Reuters. “As the V-shaped recovery hit us in May, we’ve been doing everything in our power to add cars because customers want them.”
Hennessy spoke to Reuters the day after Vroom posted second-quarter results.
Investors were disappointed in Vroom’s third-quarter revenue forecast, sending its stock down more than 15%.
Hennessy said Vroom’s forecast reflects the fact its average selling price has “come down a lot as a result of the pandemic.”
Americans typically become more frugal and favor used cars in uncertain times.
“It is a lower revenue, but we’re expecting to make more dollars per unit than we thought,” Hennessy said. “So the numbers that really matter – the profit that we make from the car – are intact.”
Online sales still only account for around 1% of the roughly $840 billion Americans spend annually on around 40 million used cars. But after numerous U.S. states went into COVID-19 lockdowns in March, the advantage of socially-distant online sales has come squarely into focus.
Hennessy said sales in pandemic-hit states like California, Texas and Florida remain “very strong” and Vroom has seen a 20% increase in demand in U.S. cities.
“That’s either people who want to get away for a week and need to exit the city,” he said, “or there’s a migration from the cities to suburban areas and we think customers are securing cars because they’ve got a new life.”
(Reporting By Nick Carey; Editing by Chizu Nomiyama and Chris Reese)
