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Can't Ignore the Carvana Craze!

SoCalMark

Noob
Oct 14, 2010
29
23
8
Fountain Valley, CA
First Name
Mark
I just watched again as the shares of Carvana stocks rose from 11% to 27.55 and had a revenue of $360.4 million! Pretty good for a guy that started on Shark Tank.

In the first quarter, it sold 18,484 vehicles, up 122% from the year-ago period. That was slightly above management's guidance of 18,450. That was driven by higher penetration in existing markets and contributions from newly launched markets. Carvana launched 12 new markets in the first quarter, bringing its total to 56.

Carvana is selling lots of cars, but are they doing it with good margins? The answer to that is yes — and increasingly so. CVNA has been tinkering internally with its pricing algorithms, and it’s working. Gross profit per unit is also tracking similarly — from $1,539 in 2017 to over $2000 last year.

Carvana improves the user experience dramatically. Piles of paperwork that no one actually goes over with a fine-tooth comb are now streamlined into a ten-minute process from beginning to end. Next-day car deliveries are available in select markets for buyers who are antsy to drive their new vehicle.

Carvana is still in the early stages of a long-term secular trend.

THIS is the Millennial trend --- and it will continue this way. Carvana's motto tagline is a great, straightforward one too:

"BECAUSE CAR BUYINGSHOULDN'T SUCK"
 
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AWNick

Getting Refreshed
Aug 26, 2017
70
53
18
Phoenix, AZ
First Name
Nick
No doc fees make their pricing more competitive than people realize. After going around trying to buy a car for my wife for about a month and having to deal with dealers, we got really close to buying from Carvana. Dealers are just shooting themselves in the foot with this and I don't see a way out unless everyone decides to clean up.
 
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Ryan Everson

Sr. Refresher
Mar 21, 2012
326
364
93
Flint, MI
First Name
Ryan
I had my first personal experience with Carvana from a customer's point of view last month and it leaves me hopeful that dealerships will be able to overcome them through a better customer experience and better prices.

Summary:
I had my personal electric Cadillac ELR (Cadillac version of Chevy Volt) for sale on CarGurus for 3 months and received 0 bites despite having a "Good Deal" badge.

I decided to see what Carvana would offer me to buy it. They offered me $1,200 OVER what I was selling it for on CarGurus. Not only did they offer me over retail for my car, they also had 0 inspection process when they picked it up. All they cared about was that the battery was charged so the car would start.

I scheduled a pickup online 3 days later, all seemed to be going well and I was thoroughly impressed with the seamless process.

However, when it came to the day of the pickup they called 5 minutes AFTER their scheduled time and cancelled because they didn't have any trucks available. (How did they not realize this sooner?) The next earliest date they could reschedule the pickup was 12 days away.

I get that things happen, but most car dealerships would have bent over backwards to rectify the situation and get someone out sooner. They were very rigid in their customer service approach and clearly whoever ends up buying my car is going to be paying well over retail for it.

Dealerships already offer better customer service and prices, we just need to work towards offering the same perceived online convenience and transparency that Carvana has.
 
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Alex Snyder

President Skroob
May 1, 2006
2,902
1,558
113
Vermont
First Name
Alex
Is Carvana the Amazon of Cars?
https://www.fool.com/investing/2019/10/06/is-carvana-the-amazon-of-cars.aspx

Change is challenging. Denial is devastating.
#qualityonlinephotos #ovad #automotivephotographers
Although I'm not sure what you're trying to do with these hashtags, that article is interesting. I like the comparisons to Amazon and invoking the rule of 40 for investors. Where I see major differences is in the advantage small car dealers have over the goliaths Amazon disrupted.

  • Car dealers can turn processes on a dime. All it takes is the stroke of a pen on a pay plan, and attention will be given to the areas management wants people to focus on.
  • Follow that up with a STRONG industry of technology providers and consultants who can help dealers fight back.
  • Put all of that together in over 30,000 car dealers across America and Carvana has quite the battle to fight.
  • I saw what dealers did in the threat of the last recession. They're scrappy! And they have a lot of help from people who want to see them succeed.
 

Jim K

Noob
May 5, 2019
11
22
3
Niagara Region
First Name
Jim
Hi all, I'm a newbie chiming in here....

Just today, in an Automotive News opinion piece: "I don't see a single "barrier to entry" or idea any other large automotive retailer couldn't adopt from Carvana, if it made financial sense to do so. I'm not sure a $5 million car vending machine fills the bill here, though. It pays for itself how, exactly? Is this an efficient use of money and real estate?" (John Possumato).

It's an interesting point, but aren't some of the big groups like AutoNation, Penske and Sonic (EchoPark) entering the game with similar alternative store formats? Aside from the big shiny vending machine buildings isn't CarMax doing the same thing? I think that speaks to the 'scrappy" @Alex Snyder was referring to. It's a natural evolution that every industry goes through and dealers will improve and adapt.
 

Baron Ringler

Getting Refreshed
Jul 6, 2010
64
37
18
New Jersery
First Name
Baron
I just watched again as the shares of Carvana stocks rose from 11% to 27.55 and had a revenue of $360.4 million! Pretty good for a guy that started on Shark Tank.
.................
This post has all the earmarks of someone who is vendor-related to the business in question.
 

AnneT

Noob
Oct 7, 2019
2
0
1
First Name
Anne
Although I'm not sure what you're trying to do with these hashtags, that article is interesting. I like the comparisons to Amazon and invoking the rule of 40 for investors. Where I see major differences is in the advantage small car dealers have over the goliaths Amazon disrupted.

  • Car dealers can turn processes on a dime. All it takes is the stroke of a pen on a pay plan, and attention will be given to the areas management wants people to focus on.
  • Follow that up with a STRONG industry of technology providers and consultants who can help dealers fight back.
  • Put all of that together in over 30,000 car dealers across America and Carvana has quite the battle to fight.
  • I saw what dealers did in the threat of the last recession. They're scrappy! And they have a lot of help from people who want to see them succeed.
Agreed dealers are scrappy and can turn on a dime, if they choose. I find it curious that they continue to minimize the threat Carvana presents. Dealers don’t want to spend what is necessary to bring their showrooms online. “Carvana isn’t profitable” because they are making the investment in technology and brand equity. They will reach scale and it will be too late to catch up. Dealers continue to believe “Carvana can’t compete with my customer relationships. I’m a hometown guy.” Isn’t that what the owner of the general store said about Walmart? Amazon didn’t just take out goliaths, they killed mom and pop shops too.
Change is challenging. Denial devastates. #ovad #hashtagsIsHowIroll