4 ms·

This is what I was saying before on here (and getting downvoted). Carvana's value add was selling used cars to people who don't like the experience of buying us

by rsj_hn 4y ago

This is what I was saying before on here (and getting downvoted). Carvana's value add was selling used cars to people who don't like the experience of buying used cars. It's a good idea and someone else can take their place. The problem with Carvana was that by offering auto loans to buyers as well as taking out loans to buy cars from sellers, they became excessively levered in a time of rising interest rates and falling demand for used cars. On the upswing they massively invested, thinking this was business success and not shocking leverage, and the downswing wiped them out. Whoever the carvana replacement is going to be, they should subcontract out the business of offering auto loans and they should borrow less to fund acquisition of cars, because the auto business is cyclical and they need to be able to survive the downturns, which requires less rapid growth during the boom. But the overall business model can be fixed, even if Carvana can't.

015a 4y ago
I can't speak for how Carvana operates today, but when I bought my car years ago the loan was subcontracted through some unrelated financial provider (Go Financial, now Bridgecrest). I remember being kind of annoyed at this; that I wasn't just signing in to Carvana's website to pay. But, its fine. I think Carvana did make mistakes; but I also think the industry as a whole is very deeply suffering right now. And we only hear about Carvana because they're a VC SV darling.
ShredKazoo 4y ago
>Whoever the carvana replacement is going to be, they should subcontract out the business of offering auto loans and they should borrow less to fund acquisition of cars, because the auto business is cyclical and they need to be able to survive the downturns Alternatively, could they hedge their exposure somehow?
ghaff 4y ago
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, financing, add-ons) and it's all a bit more than they can comfortably afford.
- Karrot_Kream 4y ago
  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 MSRP cash deal because I was on a sabbatical and had more time than usual. But my partner and I were ready to go for Carvana before my sabbatical or if we couldn't find a dealer willing to stay low-bullshit with us. I ended up calling 6 dealerships and asking my partner to clear her evening just for the one dealership that offered us a low-bullshit deal.
  - deleted 4y ago
    [deleted]
  - ghaff 4y ago
    >If I have cash for MSRP why do I have to deal with "minimal haggle"? Because I want to save money? It literally took about 5 minutes to ask them to add the ~$1500 price of some factory-installed options to my trade-in price and they had a deal. It wasn't completely frictionless but far and away the main hassle was just car availability. Had I been willing to take a similar vehicle they had on the lot it would have been quicker.
    - Karrot_Kream 4y ago
      Sure, I don't doubt that there's a market for people who want to save money. I'm saying there's probably enough demand for a low hassle car purchase at higher price points that CarMax won't be the only player in town. If my area can have 10 auto dealerships of a single manufacturer, I hesitate to think that only CarMax is able to absorb the demand of low-hassle purchase.
  - listenallyall 4y ago
    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.

by rsj_hn 4y ago

015a 4y ago

I can't speak for how Carvana operates today, but when I bought my car years ago the loan was subcontracted through some unrelated financial provider (Go Financial, now Bridgecrest). I remember being kind of annoyed at this; that I wasn't just signing in to Carvana's website to pay. But, its fine. I think Carvana did make mistakes; but I also think the industry as a whole is very deeply suffering right now. And we only hear about Carvana because they're a VC SV darling.

ShredKazoo 4y ago

>Whoever the carvana replacement is going to be, they should subcontract out the business of offering auto loans and they should borrow less to fund acquisition of cars, because the auto business is cyclical and they need to be able to survive the downturns Alternatively, could they hedge their exposure somehow?

ghaff 4y ago

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, financing, add-ons) and it's all a bit more than they can comfortably afford.

Karrot_Kream 4y ago
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 MSRP cash deal because I was on a sabbatical and had more time than usual. But my partner and I were ready to go for Carvana before my sabbatical or if we couldn't find a dealer willing to stay low-bullshit with us. I ended up calling 6 dealerships and asking my partner to clear her evening just for the one dealership that offered us a low-bullshit deal.
- deleted 4y ago
  [deleted]
- ghaff 4y ago
  >If I have cash for MSRP why do I have to deal with "minimal haggle"? Because I want to save money? It literally took about 5 minutes to ask them to add the ~$1500 price of some factory-installed options to my trade-in price and they had a deal. It wasn't completely frictionless but far and away the main hassle was just car availability. Had I been willing to take a similar vehicle they had on the lot it would have been quicker.
  - Karrot_Kream 4y ago
    Sure, I don't doubt that there's a market for people who want to save money. I'm saying there's probably enough demand for a low hassle car purchase at higher price points that CarMax won't be the only player in town. If my area can have 10 auto dealerships of a single manufacturer, I hesitate to think that only CarMax is able to absorb the demand of low-hassle purchase.
- listenallyall 4y ago
  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.