Another publicly traded dealer group has made a significant investment in the online car sales space.
AutoNation said Tuesday it has obtained roughly a 7-percent ownership stake in Vroom after a $50 million strategic investment in the online car retailer.
“We are excited about our investment in Vroom and the potential collaboration between our companies,” AutoNation chairman, chief executive and president Mike Jackson said in a news release.
“With this strategic investment, AutoNation remains uniquely positioned to lead our industry towards the future of the consumer buying experience,” he said.
Vroom has been one of the leading online car sales platforms to crop up in the past handful of years, along the likes of Carvana and Shift.
Paul Hennessy has been Vroom’s CEO since June 2016. He joined the company after serving as the CEO of Priceline.com and chief marketing officer of Booking.com (both are part of Booking Holdings Inc.)
“AutoNation has been one of the chief trailblazers in transforming automotive commerce in the past several decades,” Hennessy said in the news release. “It is a perfect fit to have them in our family as our industry is quickly scaling towards the digital purchase and sale experience that we are offering.”
AutoNation reported third-quarter results Tuesday morning and was set to host an investor’s call at 11 a.m. ET. Net income from continuing operations for the quarter were $112 million, up from $98 million a year ago. The earnings per share of $1.24 was a third-quarter record.
In its earnings release, AutoNation says investing in Vroom, “provides a foundation for potential strategic partnership opportunities with experienced and proven e-commerce executives.”
It follows a similar move by fellow public retailer Lithia just last month.
With its $54 million investment, Lithia led a $140 million round of Series D financing in Shift, an online automotive marketplace. The funding, which included equity and debt, more than doubled Shift’s total financing of equity and debt, bringing it to $265 million. Lithia and Shift also formed a strategic partnership, and Lithia CEO and president Bryan DeBoer joined Shift’s board of directors.
And then in mid-October, Shift quadrupled its floorplan capacity thanks to a new credit line for buying used cars. With that news came Lithia acquiring more equity interest in the online marketplace.
Lithia chief financial officer John North said in an Oct. 11 news release: “Our deep industry relationships resulted in an immediate benefit for Shift. Access to capital for inventory procurement will increase vehicle sales. As a result of this collaboration, Lithia has received an additional equity interest in Shift.”