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As Carvana crashes, used car dealers, not buyers, stand to win big

businessinsider.com

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Re: As Carvana crashes, used car dealers, not buyers, stand to win big

#51

Post by birken »

altacc wrote: post #4

The problem seems to be that they sold too many cars with a negative margin. I've heard stories of people selling their cars sight unseen to Carvana for above market value and it seems they were left holding too many cars as the second hand car market normalized and prices decreased. Like a lot of VC funded companies, they were blinded to market realities by the cash each funding round produced. If they'd had to purc…

I sold two cars to Carvana in the last year and in both cases the offers from Carvana (which included them picking up the car from my driveway) were multiple thousands of dollars better than Carmax or dealerships.

Could I have made more selling privately? I don't know, but I can tell you that Carvana paid very handsomely to do all the work involved with buying your car.

Re: As Carvana crashes, used car dealers, not buyers, stand to win big

#52

Post by whakim »

davewritescode wrote: post #16

The problem is with buying cars site unseen. I follow some car groups that revolve around tuning BMW engines for lots of power. It became a meme to post before and after pictures of heavily modified, drag strip/race prepped cars and then on the back of Carvana trucks some months later. I feel really sorry for people who bought some of those 340s and M3s. It’s just too easy to unload junk cars on companies like Carvan…

I don't actually think buying cars sight unseen is the main obstacle here, because what you're describing (folks taking advantage of the system) represents a tiny percentage of transactions.

I think the biggest issue is that you've taken a business which has notoriously low margins (used cars) and you're operating on the lowest margin end on both sides. On the sell side you're buying cars that would otherwise be sold private party - i.e. from the most price-conscious sellers. On the buy side you're competing against dealerships on price but also offering a more premium/white-glove experience which eats into your margins.

Re: As Carvana crashes, used car dealers, not buyers, stand to win big

#55

Post by hn_throwaway_99 »

I bought a used car from Carvana before the pandemic, and this is pretty sad news to me because after that purchase I vowed that all my future cars would come from Carvana. The buying experience was simply excellent for me, and I couldn't be happier with the car I bought. I figured I probably could have gotten a comparable deal slightly cheaper somewhere else, but I would have wasted a ton of time, and still would have crossed my fingers that I wasn't buying a lemon - any slight premium I paid to Carvana I felt was totally worth it.

I hope they can fix their financial issues (sounds like they just "bought high and are selling low") and their operational issues (in some places word got out that it was cheaper to just "buy" a Carvana car and then return it < 7 days rather than getting a car rental), because, at least for me, their purchasing experience was great.

Re: As Carvana crashes, used car dealers, not buyers, stand to win big

#57

Post by MrMan »

djbusby wrote: post #37
jcampbell1 wrote: post #21

Earlier quoted context omitted.

Drivetime is a privately held subprime used dealer group that lists their inventory on Carvana, which is a public spinoff of Drivetime. The CEO of Carvana is the son of the Drivetime owner. Plenty of room to launder profits via wholesale prices.

This seems like wild speculation.

It’s probably dead accurate, let’s find out

Re: As Carvana crashes, used car dealers, not buyers, stand to win big

#58

Post by Aunche »

arealaccount wrote: post #45

Bummer, buying from a dealer always feels bad. Would be great if a company could figure out a digital off the shelf shopping experience. The last car buying experience I had the brick and mortar dealerships listed so many bait cars that online shopping was scammy/pointless.

Carvana is basically a very poorly operated CarMax. You get a much better customer experience there, but you're also paying a premium for it.

Re: As Carvana crashes, used car dealers, not buyers, stand to win big

#59

Post by hnburnsy »

godzillabrennus wrote: post #3

Doesn’t help they seem to have played so fast and loose they lost the legal ability to register vehicles in the name of their buyers: https://www.motor1.com/news/621947/carvana-title-registratio...

One of Carvanas major problems is titleing and registering cars doesn't scale. It is in most stares a manual, paperwork driven process. Example, Ohio has 88 County Clerks of Courts Title. Source, family member who worked there.
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