Rocket, eyeing major auto retail goals, launches online vehicle marketplace for consumers
Detroit — Rocket Auto on Tuesday launched an online vehicle marketplace for consumers, the latest step forward in the company's nascent push to become a major player in the automotive retail space.
The company, which is under the umbrella of billionaire Detroit businessman Dan Gilbert's Rocket Companies Inc., announced that RocketAuto.com went live with inventory of some 35,000 vehicles listed by more than 300 auto dealers across the country. The company expects its inventory to grow as additional dealerships join the platform, with "many large dealer groups ... already committed to the platform," according to Rocket Auto CEO Victor You.
"Consumers have always wanted a better search and selection experience as they navigate through marketplaces," You said in an interview Tuesday.
But oftentimes, he said, customers start the car-buying process before they're quite ready to buy. So where competing marketplaces might send a customer directly to a dealership for assistance, You said, Rocket instead allows the customer to navigate the process on their own and then come to the dealership when they're actually ready to close the sale.
Dealerships that partner with Rocket Auto can display their inventory on the site. Prospective car buyers then can view various makes and models at different price points across the platform's network of dealerships. There's also a tool where users can save vehicles they're interested in and compare them to other options.
And in the coming months, You said, Rocket Auto intends to offer a "fully-built digital retailing platform" through which car buyers will be able to complete such steps as securing financing and adding warranty coverage. And next year, the company expects to add new car sales and leasing. At launch, the marketplace offers only used vehicles.
In announcing the launch, Rocket Auto highlighted the advantage it sees in leveraging Rocket Cos.' existing customer base. More than 14 million people in the U.S. have worked with sister companies including mortgage lending giant Rocket Mortgage, Rocket Homes or one of Rocket's other ventures, according to the company.
Company leaders also pointed to research from consumer credit reporting agency Transunion suggesting that clients are three times more likely to buy a car after making a mortgage inquiry and are 50% more likely to purchase a vehicle after refinancing.
“Rocket Companies interacts with millions of Americans every year through our mortgage, real estate and personal lending businesses. More than 90% of those clients choose to come back to us time and again because of the experience we provide,” Jay Farner, CEO of Rocket Cos., said in a statement. “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 best-in-class client service they are used to.”
Rocket Auto came out of Rock Connections, Rocket's call center service provider, which in 2017 formed a partnership with online used-car retailer Vroom. Rocket employees set to work selling on behalf of Vroom.
Up until now, Rocket Auto's primary role has been to fulfill sales for Vroom and other clients. But over time, company leaders saw the venture as an opportunity to expand the reach of Rocket's technology platform and add to the value of the overall business. Thus, the launch of a consumer-facing marketplace.
“From a Rocket Company standpoint, our goal has always been to help facilitate life’s hardest transactions and make it simple through that client journey," said You.
In the second quarter, Rocket Auto facilitated 15,600 auto sales, up 143% year-over-year. The company expects to more than double its car sales this year, compared to the $750 million in gross merchandise value it generated last year. Earlier this month, Rocket reported that the auto business had generated $484 million in GMV in the second quarter alone.
The expansion into autos comes as consumers are eager to buy from scarce inventories of vehicles and amid signals that mortgage activity could be cooling somewhat. Rocket executives have touted the untapped potential of the company's technology platform to extend beyond mortgages to drive growth and make other significant, time-consuming processes easier for consumers.
They have pointed to autos as one of a few key areas where the company sees opportunities to reach large portions of U.S. consumers, even as Rocket Mortgage chases its goal of becoming the leading retail home purchase lender in the country by 2023.
“The ability to reach more people ... with a great buying or leasing experience through automotive, that was almost the next logical step," You said. "Our goal is to tie a lot of the threads between life’s hardest financial obstacles."
Rocket's stock closed up 2.62% to $18.03 per share Tuesday.