Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

bloomberg.com

Post reply on HN
Print view View original

51–60 of 94 posts

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#51

Post by twblalock »

rhino369 wrote: post #34
parkingrift wrote: post #29

Earlier quoted context omitted.

Pardon my ignorance, but why would used car prices necessarily impact a used car dealer? Surely these dealers have to pay more to buy these cars and so their margins should be unchanged? Or is the issue that they are buying used cars and prices are falling so fast that their margins are shrinking?

Because they need to keep the cars on their lots on their books. If car prices drop 25% they lost 25% of the value of their inventory. Not that car values have crashed 25% or will.

I bet they will crash 25%. On the wholesale market, that might have already happened.

I was seeing 20-year-old Ford Rangers and Chevy S-10s with 200k miles listed on Craigslist for $10k a month ago. If you adjust for inflation that is actually more than they cost when they were new! Pick pretty much any make and model of car and you will see the same thing.

Even just from looking at Craigslist occasionally I have noticed a significant drop in prices for used vehicles in the past month.

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#52

Post by bilsbie »

bagels wrote: post #46
wilsonnb3 wrote: post #41

Earlier quoted context omitted.

The concept is great but I never really saw the point of Carvana when CarMax already exists. Unless your plan is just to leverage easy capital to push CarMax and traditional dealers out of the business like Uber and taxis.

Carvana came to my house and picked up the car I was selling. It was all done in a few minutes. I didn't have to take any pictures, just describe it on the web form, and sign some papers when they showed up.

Getting a quote just by entering your license plate was also brilliant.

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#53

Post by mattbrewsbytes »

dwater wrote: post #26
mattw2121 wrote: post #13

I've purchased 2 vehicles through Carvana, and honestly the process was fantastic. I feel I got a fair deal on both vehicles, the quality was good, and everything as advertised. I did all the paperwork online and when I showed up to pick the car up was in and out in just a few minutes. The only problem I had was that the delivery tower didn't work when I dropped the coin in both times. First time the car was for me a…

When I was shopping for a used car in late Summer 2020, Carvana was priced 10-20% above traditional dealerships in the area for same make/model/trim/year/mileage. The traditional dealership process sucks so some people will pay the premium for a better experience, but as everyone's financial calculus has changed recently it may be that the number of customers who want to pay for that experience is receding.

I hate traditional dealerships, I usually would take an entire day off work to do the silly price/trade-in/finance dance because without exception it takes the better part of a day. The cost of using a vacation day (for a SW person) is close to a wash with the overhead cost of Carvana, Vroom, etc. They have much more selection on colors, trims, mileage, etc. than any local dealership and decent used cars have been scarce the past couple years.

With the 7day/100day cushion (100 days or some # miles for mechanical/safety repairs like brakes) I thought they might be losing money because the car had issues which their repair firm had to take care of. Not many local used car lots are going to do that. Maybe they were scooping up less than ideal inventory and its eating away their profits with the repairs.

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#54

Post by lancesells »

bagels wrote: post #46
wilsonnb3 wrote: post #41

Earlier quoted context omitted.

The concept is great but I never really saw the point of Carvana when CarMax already exists. Unless your plan is just to leverage easy capital to push CarMax and traditional dealers out of the business like Uber and taxis.

Carvana came to my house and picked up the car I was selling. It was all done in a few minutes. I didn't have to take any pictures, just describe it on the web form, and sign some papers when they showed up.

Certainly shocking that they are struggling with excess inventory and need to cut jobs.

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#55

Post by rozap »

wcunning wrote: post #3

This is less of a tech layoff story and more of an overlevered business with crashing asset values against very difficult short term liabilities and no ability to refinance in a rising interest rate market. The real question for normal people is if Carvana sells off a huge chunk of its inventory at fire-sale prices, does that accelerate the crash in used car prices? Is March of 2023 the right time to pick up that fun…

Maybe. Yes, the constrained supply caused a lot of people to overpay for cars, and the average monthly payment for a car surged over the last year. The deep sub prime folks will be struggling, especially as layoffs happen and people with no savings are stuck with a $700/m car payment. Repossessions have already started picking up, and there are reports of huge parking lots being filled with repo'd cars, and those cars failing to sell at auction. Obviously, if the big players can control supply enough, then I don't think there will be a fire sale. But it remains to be seen if they can accomplish that (I'd be surprised, I'll bet they'll have to liquidate and like you say, it'll all come crashing down). In any case, the Carvanas and Carmax type places, as well as unemployed consumers that have a big car payment on a soon-to-be-worth-a-whole-lot-less car are really in deep shit. Smells kind of like 2008, but this time with cars instead of houses.

Source: https://www.consumerfinance.gov/about-us/blog/market-monitor...

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#56

Post by lastofthemojito »

doctoboggan wrote: post #36
davewritescode wrote: post #25

Earlier quoted context omitted.

This is completely anecdotal but there's been a couple of times during COVID when I was stuck at a light next to a Caravana truck on it's way to drop off a car and I noticed what appeared to be non-trivial issues underneath the car. I just don't get how people can buy a used car without seeing it or sending over a professional to look at it first.

You can return the car in within first 7 days for any reason.

Doesn't it feel a bit insane to do things in that order though?

Most car sellers I've encountered will allow a prospective buyer to take a car to their mechanic to to be looked over BEFORE purchase.

The biggest downside here is if you trade your existing car into Carvana. Sure you've got 7 days to get that newly-purchased car inspected, but what happens when you get the inspection results back and decide you want to unwind the transaction - Carvana will take back the car you purchased but they will not bring your trade-in back to you. Not to mention the general paperwork hassle and the hit to your credit score (if you're financing), all for a car you're not keeping.

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#57

Post by mh- »

gunapologist99 wrote: post #44
wilsonnb3 wrote: post #41

Earlier quoted context omitted.

The concept is great but I never really saw the point of Carvana when CarMax already exists. Unless your plan is just to leverage easy capital to push CarMax and traditional dealers out of the business like Uber and taxis.

Carvana did deliveries to your home (apparently), while CarMax would deliver to their nearest lot, which might be a long way away.

I scrolled through Carvana inventory, picked a used car, purchased it, and it was delivered to my driveway like a week later. I live very far from any decent-sized car dealership.

I did all this laying in bed on my phone.

I have some complaints about the quality of their service, but the value prop is pretty amazing.

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#58

Post by txsoftwaredev »

gunapologist99 wrote: post #44
wilsonnb3 wrote: post #41

Earlier quoted context omitted.

The concept is great but I never really saw the point of Carvana when CarMax already exists. Unless your plan is just to leverage easy capital to push CarMax and traditional dealers out of the business like Uber and taxis.

Carvana did deliveries to your home (apparently), while CarMax would deliver to their nearest lot, which might be a long way away.

I purchased a car from CarMax earlier this spring online and it was an easy process. Filled out some forms online, went through some questions on the phone and then had a car dropped off in my driveway a few day later.

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#59

Post by woeirua »

All of the iBuyer like companies are going bankrupt. Turns out there just no way to cut costs enough to make a profit in these low margin, capital and asset intensive industries. The idea that Carvana, OpenDoor, Redfin, Zillow, etc. were ever going to achieve something like a monopoly over their respective industry was laughable at best. Doomed from the moment they opened the doors.

Re: Carvana to cut 1,500 jobs as online auto dealer’s troubles mount

#60

Post by disgruntledphd2 »

mattbrewsbytes wrote: post #53
dwater wrote: post #26

Earlier quoted context omitted.

When I was shopping for a used car in late Summer 2020, Carvana was priced 10-20% above traditional dealerships in the area for same make/model/trim/year/mileage. The traditional dealership process sucks so some people will pay the premium for a better experience, but as everyone's financial calculus has changed recently it may be that the number of customers who want to pay for that experience is receding.

I hate traditional dealerships, I usually would take an entire day off work to do the silly price/trade-in/finance dance because without exception it takes the better part of a day. The cost of using a vacation day (for a SW person) is close to a wash with the overhead cost of Carvana, Vroom, etc. They have much more selection on colors, trims, mileage, etc. than any local dealership and decent used cars have been sc…

As an aside, it's kinda sad that you need to cost your vacation days (unless you're a contractor). One of the better EU laws is that you must take your holidays and can't just cash them out, which is better overall, I think.
Post reply on HN