Rocket Auto website live with 35000 used models - Automotive News

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Rocket Auto this week officially launched the online auto retail platform the company had announced in May.

The new rocketauto.com announced Tuesday contained more than 35,000 used vehicles from more than 300 dealers, according to Rocket Auto. The Detroit-based unit of Rocket Cos. said it expected to add new “inventory partners” throughout the rest of the year and new-car sales and leases in 2022.

CEO Victor You said that within the “coming weeks” the site would add “several hundred dealerships from several very large dealer groups.”
You said the company seeks to be among the top 10 used-vehicle sites by the end of the year.

Rocket Auto has traditionally served as a white-label call center for auto retailers. It said it helped clients sell 15,600 vehicles in the second quarter, a 143 percent increase over the second quarter of 2020.

This year, the company seeks to have a role in selling double the gross merchandise value it handled in 2020.

The online auto listing space already contains multiple established competitors. But You said that while these rivals can generate leads for retailers, the path between a customer picking a vehicle and a retailer closing upon it “is not as seamless as one would hope for.”

A customer visiting a traditional listing site might need to call multiple dealers to inquire about various models found there. A dealership might field calls from online tire-kickers. You said Rocket Auto’s established ability to serve as an intermediary with its trained Cloud Force team of employees could triage the sale and save both parties from wasting time. The company could connect a customer ready to buy with the correct person at a dealership, he said.

These could be strong leads. Citing TransUnion research, Rocket Auto said “clients are three times more likely to buy a car after a mortgage inquiry, and 50 percent more likely to purchase a vehicle after refinancing.”

Rocket Auto said it would make its employees available to help customers find a vehicle, obtain financing and arrange delivery through the website. The company said it could send dealers “structured deals, not just leads.”

Rocket Auto also plans to build out the customer experience to allow consumers to shop the dealer’s financing and add-on products up front. This feature should be completed in a matter of months, according to You.

“That is on the road map,” he said.

Rocket Auto noted it could put a dealer’s products before more than 14 million consumers who use the sister companies Rocket Loans, Rocket Homes and Rocket Mortgage.

“Rocket Companies interacts with millions of Americans every year through our mortgage, real estate and personal lending businesses,” Rocket Cos. CEO Jay Farner said in a statement.

“More than 90 percent of those clients choose to come back to us time and again because of the experience we provide. With Rocket Auto, we are growing our car sales platform so those who know us and trust us have a place to purchase their next car within the Rocket ecosystem — using the technology and world-class client service they are used to.”

These could be strong leads even without Rocket Auto’s triage process. Citing TransUnion research, Rocket Auto said “clients are three times more likely to buy a car after a mortgage inquiry, and 50 percent more likely to purchase a vehicle after refinancing.”

Rocket Mortgage touts itself as “the nation’s largest mortgage lender.” But despite this success in direct residential lending, Rocket Cos. hasn’t entered the direct auto financing space with Rocket Auto.

Asked about this, You referenced existing dealer-lender relationships and competition from automaker captive financing. He said Rocket Auto decided to “focus on the consumer journey” instead. He said the company also desired to be “mindful of dealers.”

Rocket Auto's client list includes Vroom, which reached an arrangement in May 2020 to list vehicles for sale on the Rocket Auto website.

Rocket Auto promised "not less than a minimum" of used-vehicle sales or leases on the Rocket Auto website would involve Vroom cars. Vroom in turn gave Rocket 183,870 shares of stock up front and agreed to pay “a combination of cash and stock” for all Vroom sales assisted by the Rocket Auto website, up to 8,641,914 shares over four years. That works out to about $4.66 million up front and potentially at least $218.9 million more over the life of the deal, based upon Vroom’s Monday closing price of $25.33 per share.

According to a June 2020 Vroom initial public offering prospectus, the Rocket Auto site had been expected to launch in the third quarter of 2020. Vroom later extended this time frame into 2021 throughout subsequent government filings.

“Buying a car is one of the largest purchases anyone makes in their life, but the process can be intimidating and overwhelming,” You said in a statement. “Rocket Auto is reimagining this experience by building a marketplace with massive inventory and tools specifically engineered to make it stress free.

“We have used Rocket Companies’ decades of experience bringing simplicity to the mortgage space through Rocket Mortgage and married it with our learnings from years supporting sales for Vroom.”

You described the Vroom relationship as a different arrangement than the company’s revenue model for other listings. He said Rocket Auto preferred a format where a dealership paid it based upon sales rather than a flat fee.

“We love performance,” he said.

However, he said the company would adopt an alternative strategy in locations where this was prohibited.

“We want to remain 100 percent compliant,” he said.

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