As Carvana crashes, used car dealers, not buyers, stand to win big • Hacker News Board

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

#211

Post by kodyo » Mon, Dec 12, 2022, 3:52 PM UTC

gmd63 wrote: post #192

hgdfhgdfhgf wrote: post #170

Earlier quoted context omitted.

"It's ironic that free market types are completely for subsidies when the private industry does it, although public and private subsidies both have issues." This analogy is strange. Free market types aren't against private investors throwing private money at bad investments nor would they want any regulations against it. "At least government subsidies have a benevolent intent usually." Government subsidies aren't kno…

Whether an VC firm engages in subsidies for its clients or whether a government engages in subsidies for its electorate, money is being spent to distort market prices and that adds friction to accurate market pricing. It's weird to identify issues with the tactic and then arbitrarily say one entity doing it is bad when its OK if the other one does it. If the government damages the economy with subsidies, those respon…

It's none of my business when rich people waste their money. It is my business when the robbers and murderers in the government waste my money on my behalf.

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

#212

Post by robertlagrant » Mon, Dec 12, 2022, 3:57 PM UTC

ElevenLathe wrote: post #201

robertlagrant wrote: post #198

Earlier quoted context omitted.

Cheating at what? If you sell me your house for $1 then have you "cheated" all the other house sellers? What have you accomplished by this "cheating"?

Libertarianism treats the market as a game when it suits (i.e. when other people are "cheating") and as a natural law the rest of the time (i.e. when other people want to change the already-artificial rules of the game via politics).

I don't quite follow why you're saying that, but as per my brief previous comment, I'm not saying it's a natural law, nor a game.

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

#213

Post by listenallyall » Mon, Dec 12, 2022, 4:03 PM UTC

allthecybers wrote: post #119

015a wrote: post #100

Earlier quoted context omitted.

That's... not what anyone is saying. I bought an Audi from Carvana. It was more expensive than anyone else (~2-4% more). The price they paid for my trade-in wasn't as good as some competitors. I did not interact, in any way, with one of their vending machines. I'd still do it again. It was a totally hands off experience; I will pay extra to not be talked to by someone. The checkout wizard was nearly as easy as buying…

> I feel extremely, EXTREMELY, confident in saying that this attitude has sold Teslas to three people in my bubble. You can start the process to buy a Tesla with Apple Pay. Seriously. Their new delivery process involves ZERO people; My Tesla was ordered online (Apple Pay) and dropped off at my driveway. The only human interaction was the friendly Tesla delivery associate that had a couple papers for me to sign. Audi,…

I think this is only a fair comparison if you disclose the waiting time between ordering the Tesla vs delivery.

The Audi, Volvo and Mercedes dealers may have been directing you at sub-optimal cars, but they were available to drive off the lot that day. If you're willing to wait 3 months, you can certainly order the latest Audi or Mercedes model with the exact specs and options you want. You can even pick it up at the factory in Germany and take it for a spin on the Autobahn.

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

#214

Post by listenallyall » Mon, Dec 12, 2022, 4:09 PM UTC

Karrot_Kream wrote: post #179

ghaff wrote: post #154

Earlier quoted context omitted.

And going into a dealer with cash and buying a car at list price and taking the offer for a trade-in--all with minimal haggle--really isn't a terrible experience in general. I bought a new car over the summer which wasn't immediately available but otherwise was a pretty straightforward transaction. The pain is that people get pulled into negotiations that mix in a bunch of different things (purchase price, trade-in,…

That's still a lot of work. If I have cash for MSRP why do I have to deal with "minimal haggle"? Can I not just buy the asset? There is definitely an audience of people who know what they want and how much they want to spend and Carvana is able to meet it. I think there's definitely more demand for effortless purchases than just CarMax. I bought an electric car recently and only put up with the minimal haggle of an M…

If you want to walk up to a dealer and announce that you have cash and want to pay full sticker, they will be happy to roll out a red carpet for you. But you still can't just "buy the asset." Local governments require all kinds of documentation and registration "bullshit" that it sounds like you are blaming the dealer for.

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

#215

Post by listenallyall » Mon, Dec 12, 2022, 4:31 PM UTC

bombcar wrote: post #126

dboreham wrote: post #70

Earlier quoted context omitted.

I've bought a few cars from dealers in recent years and honestly the experience was ok to fine. In every case I knew which vehicle I wanted to buy before contacting the dealer, so perhaps that makes a difference. Through the whole process where they try to make you buy warranties and so on, I just say "I feel lucky", and chuckle a bit. If they ask about another warranty, I repeat "I feel really lucky", again jovially…

Dealers can be pretty decent if you know a good one and just say no. Or ask why they offer a warranty if the car’s so good. The answers are always amusing.

There's also the fact that nobody ever brags about turning down all the dealer options like warranties and wheel protection and then actually gets bad curb rash or a $3500 bill for a timing belt replacement.

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

#216

Post by ghaff » Mon, Dec 12, 2022, 4:37 PM UTC

listenallyall wrote: post #214

Karrot_Kream wrote: post #179

Earlier quoted context omitted.

That's still a lot of work. If I have cash for MSRP why do I have to deal with "minimal haggle"? Can I not just buy the asset? There is definitely an audience of people who know what they want and how much they want to spend and Carvana is able to meet it. I think there's definitely more demand for effortless purchases than just CarMax. I bought an electric car recently and only put up with the minimal haggle of an M…

If you want to walk up to a dealer and announce that you have cash and want to pay full sticker, they will be happy to roll out a red carpet for you. But you still can't just "buy the asset." Local governments require all kinds of documentation and registration "bullshit" that it sounds like you are blaming the dealer for.

In fairness, most car dealers are also setup for people who expect to be able to haggle, probably need financing, want to drive a car off the lot, etc. So the whole system just isn't set up for someone to basically go online, place an order, and wait to get told a delivery date.

There is a bit of a paperwork dance--also insurance--but, as you say, that's hard to eliminate totally.

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

#217

Post by ElevenLathe » Mon, Dec 12, 2022, 4:47 PM UTC

robertlagrant wrote: post #212

ElevenLathe wrote: post #201

Earlier quoted context omitted.

Libertarianism treats the market as a game when it suits (i.e. when other people are "cheating") and as a natural law the rest of the time (i.e. when other people want to change the already-artificial rules of the game via politics).

I don't quite follow why you're saying that, but as per my brief previous comment, I'm not saying it's a natural law, nor a game.

Sorry, I thought you were implicitly calling it as a game (which is IMO the correct and true view), since cheating can only happen in a game where there are established rules.

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

#218

Post by markatto » Mon, Dec 12, 2022, 4:50 PM UTC

phphphphp wrote: post #197

hn_throwaway_99 wrote: post #153

Earlier quoted context omitted.

I'm not really sure I agree with your argument. It seems quite clear that what has really contributed to Carvana tanking over the past year was they vastly mispriced their product. What happened to Carvana is essentially exactly what happened to other companies that misjudged the effect of the pandemic, e.g. Zillow with their bad experiment with house flipping (paid too much for houses) and Bright Health (vastly unde…

Depending on exactly when you bought your car from Carvana, Carvana likely lost between $2,000 and $5,000 on your purchase. Carvana has never made money on selling cars. If you're willing to pay $5,000 more for a used car because you'd like good service, then there are a great deal of options available to you. The simplest option is to go to a reputable dealership that focuses on customer service (which have existed…

Why do you think the unit economics of Carvana have to be worse than a traditional dealer? Maybe they have to do more shipping of vehicles around, but they are less reliant on storefronts/sales staff. It seems likely to me that they overspent on marketing/gimmicks/badly timed top-of-market inventory, but that doesn’t mean that the business model fundamentally can’t work.

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

#219

Post by ljw1001 » Mon, Dec 12, 2022, 5:29 PM UTC

mbreese wrote: post #168

gmd63 wrote: post #142

Earlier quoted context omitted.

I think you can generalize even further and say that this story applies to most companies flooded with investor capital. Take Uber for example. The VC subsidies convinced a significant portion of people to upend their lifestyles and attempt to make money in an ecosystem where prices were artificially juiced by VC money. It's ironic that free market types are completely for subsidies when the private industry does it,…

> VC subsidies are usually about hiding the true market value of a product to attract customers A more benevolent reading of this is that the VC money is used to make the product more affordable at small scale. Many times products become cheaper/affordable at larger scales. Young companies use the VC $$ help to get them across that inflection point. This logic breaks down when the product cost doesn’t get lower with…

A less benevolent take is that VC money is primarily used to buy market share by selling below cost until other competitors exit and the company is left with a monopoly.

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

#220

Post by ghaff » Mon, Dec 12, 2022, 6:22 PM UTC

vel0city wrote: post #176

ncallaway wrote: post #103

Earlier quoted context omitted.

> The only winning move seems to be stay private and accept there's a near-term cap on your revenue growth, after which you will grow much more slowly (at the natural supply expansion rate). Or go multi-brand, and introduce cheaper brands for the lower quality properties, to maintain the goodwill for the higher quality brands. Many hotels do this with many different brands under the same organization that segment the…

I recently stayed in a hotel that was an example of how extreme the brand split of various hotels was. It was one building with three different brands operating out of it. One check in counter, one guest lounge, one gym, etc. Three different elevator groups though; one for each brand. Ultimately all the rooms were practically the same, but the trim was a little different between the brands. But hey, if you feel that…

I just saw that for the first time with a Residence Inn I booked where they said to check-in at the adjoining Moxy. In that case though the rooms probably are different.