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BREAKING news! Carvana & Vroom is bleeding cash. Is Ecommerce in auto DOA?

Eric88

Noob
Jan 27, 2019
25
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Erik
Whether or not specifically Carvana "makes it", I believe that they're the biggest force currently training customers to expect 100% of the car-buying experience online. Maybe Carvana will fold under their own specific challenges, but if they do, they're leaving a gap that auto dealers can eventually fill with a decent turn-key, online-only sales program.
 

DrewAment

Sr. Refresher
Apr 30, 2009
304
129
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First Name
Drew
the company is, at heart, a low tech car dealership and not a high tech platform company.
The most in your face and truthful statement. They are a CAR DEALER with clever marketing (used car coin machine). Any other car dealer would be out of business by now if ran the same way as them.
 

Cullen C

Getting Refreshed
Sep 9, 2014
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Cullen
The most in your face and truthful statement. They are a CAR DEALER with clever marketing (used car coin machine). Any other car dealer would be out of business by now if ran the same way as them.

Agree most(all) other dealers operating this way would be out of business without the support of the public markets. Totally disagree that they are a “low tech” dealer. While they are not purely a technology company, they are the most technologically advanced dealer in the country, that’s not an opinion.
 
Jan 1, 2013
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Greg
It is simple math. According their most recent operating results they increased their total gross profit including F&I to $2408 per vehicle. Assumedly they are paying for reconditioning at cost, not retail, so no lift in the fixed ops departments. Nonetheless, not great but respectable given their model and the fact that they are sourcing the vast majority (86%) of their vehicles from auction.

Their problem is on the expense side. They lost $82.6M on sales of 36,766 units or $2246 per car. Explain to me again how increasing volume will fix this? So, they would need to improve gross profit per vehicle to $4850 per car to break even. That ain't happening.

There is nothing proprietary about what they are doing and they have a lot less brand cachet than Tesla. At best they will be fondly remembered for driving the push towards online purchasing of used vehicles. Nonetheless, investors will soon grow weary of pouring cash into this tire fire.
 

ed.brooks

Sr. Refresher
Jan 15, 2010
1,111
655
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Ed
Interesting article in AutoRemarketing today, "Carvana marches toward becoming ‘largest, most profitable’ retailer"

Excerpt:
(P)resident, and chief executive officer Ernie Garcia III...
“Third quarter was our 23rd quarter of triple-digit revenue growth, and a 250% growth in the number of cars we bought from customers,” he said.
Carvana dealerships retailed 46,413 units in the quarter, an 83% increase, driving total revenue to $1.95 billion, an increase of 105%. “We’ve built something our customers love,” Garcia said, noting that in seven years Carvana has grown to become the third-largest retailer of used cars in the U.S.
Garcia said that Carvana in the third quarter:
  • Bought 70% more cars from customers as sold to them
    • Sourced 31% of retail cars from Carvana customers
      • Improved gross per unit from $1,000 to $3,000, and margin by 20%
In its third-quarter performance news release and Letter to Shareholders, Carvana reported, yearover year (unless noted), that it:
  • Retailed 46,413 vehicles, an 83% increase
    • Increased vehicles purchased from customers by 249%, up from 188% in second quarter
      • Earned $1.095 billion in revenue, a 105% increase
      • Served 72,000 customers, up from 60,000 the prior quarter