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Being in the used car market requires being good at buying used cars. This is why Carmax, the O.G., outlives these would-be disruptors.
by jeffbee 3y ago
Being in the used car market requires being good at buying used cars. This is why Carmax, the O.G., outlives these would-be disruptors.
- sokoloff 3y agoTrue and that makes me worry about Carvana quite a bit. The few anecdotes from pandemic about Carvana bids made think they were prioritizing having cars over making money.
- toomuchtodo 3y agoCarvana is an auto loan originator that used cars to originate loans. Can’t sell securitized auto loans without the cars. https://www.cnbc.com/2023/01/18/carvana-adopts-poison-pill-and-sells-4-billion-of-auto-loans.html https://www.cnbc.com/2023/01/18/carvana-adopts-poison-pill-a...
- maxerickson 3y agoLots of financial institutions have car buyers that assist customers, because they make money originating loans. They just do it "for profit" instead of "at scale".
- PaulHoule 3y agoI think it's a crazy competitive business. The new car dealer is always getting cars off lease, there's the Buick enthusiast who always has a few, the guy who brings up old police cars from Southern PA, etc. If you are spending all your money on expensive TV ads and silly vending machines you can't win.
- deleted 3y ago[deleted]
- oifgedg 3y agoThey were prioritizing growth. A common priority for firms seeking boom or bust returns.
- kube-system 3y agoI never thought it was market with much room for disruption. There are so many competitors in this market catering to every niche possible. Where’s the inefficiencies? The market that needs disrupted is the new car market but that’s fraught with legal barriers that are not easily overcome.
- CPLX 3y agoThe inefficiency is that buying a used car completely sucks from the buyer perspective. It really would be something if you could just like go buy a used car at a fixed fair price with literally zero hassle. Problem is it doesn’t seem like there’s any way to actually create that business and make any money.
- tylerrobinson 3y ago> It really would be something if you could just like go buy a used car at a fixed fair price with literally zero hassle. Is this not exactly what Carmax does, as said above?
- kube-system 3y agoHassle is inherent to the used car market, because the product has inherently inconsistent and diminished quality, supply inherently mismatched with demand, etc. A good website or a clever business plan will never fix the problem that used cars cannot be manufactured. “No haggle” pricing is hardly a differentiator. Many traditional dealers in volume markets have done this for decades now. And buyers who really are willing to pay a premium to not haggle can simply pay sticker and choose to not haggle. Buyers who are frustrated with the used car experience and have the money to spend buy new cars. These disruptors are left fighting over some slice of buyers in the mid-market using the same limited sourcing ability thousands of other competitors suffer from.
- mmcgaha 3y agoIt is funny that I always hear people want no haggle cars but no ever wants no haggle flea markets, or jewellery stores, or home buying. Why do folks have such a problem with cars?
- testfrequency 3y agoWell funny story about that. I was at CarMax recently at the sales person told me how fucked over CarMax was on their Tesla fleet after buying so many…while the prices were dropping rapidly. She said the CEO had to do a fire sale to move them all off their inventory sheets quickly, and they still lost a lot of money
- solarpunk 3y agoDid you buy one?
- testfrequency 3y agoNo, I was buying another vehicle though and trading in my Tesla - which is how the conversation came up
- slaw 3y agoHertz sells 2 years old Model 3 for $21k. New model 3 is $39k. High depression is likely because Teslas are very expensive to keep. For example door handle is $495. I can buy door handle for Malibu for $24 on Rockauto.
- kube-system 3y agoYou can buy a Model 3 door handle on RockAuto for $95.79 :) But yes, repairs (and insurance) are expensive for these vehicles.
- thehappypm 3y agoA huge issue with used EVs is rebates. A new Tesla starts at about $41k. In my state, state+federal rebates add up to over $10,000. So, a new Tesla is ~$31,000. Used cars don’t get rebates, so you’re highly incentivized to buy new.