Carvana to Boost Capacity, Betting Online Car Sales Are Here to Stay

[Dan00Hawk]

So as a buyer in the autoworld for the past decade, I've been following Carvana's progress. My personal experience is that they typically overpay at auctions and for buying people's cars compared to most dealers. This allows them to get a bunch of inventory. Stuff they don't want to keep, they just sell at auctions. They recondition vehicles on their own to keep those costs down. They are typically competitive when selling vehicles on the retail market, but not always. But while they are reporting a gross profit per unit, they continually report losing money on their year end financials with a net loss time after time. Their annual losses last year were $460 million. I believe the key to them staying in business is that they are making money on the financing side of it. They are essentially a finance company that happens to sell cars.

https://investors.carvana.com/~/media/Files/C/Carvana-IR/documents/events/q4-2019-cvna-shareholder-letter.pdf

Carvana improves Q4, FY 2020 revenue as losses widen

Carvana, an e-commerce platform for buying used cars that delivers cars to customers with a massive, coin-operated vending machine, boosted its revenue for Q4 and full year 2020 as losses widened over 2019, according to an earnings release. Revenue for…

www.vendingtimes.com

I wish I had bought some of their stock last year at this time when it tumbled to $22-$30. Lately, it's been in the $280 to $300 range, but dropping a bit.

 

[OffshoreDrilling]

So as a buyer in the autoworld for the past decade, I've been following Carvana's progress. My personal experience is that they typically overpay at auctions and for buying people's cars compared to most dealers. This allows them to get a bunch of inventory. Stuff they don't want to keep, they just sell at auctions. They recondition vehicles on their own to keep those costs down. They are typically competitive when selling vehicles on the retail market, but not always. But while they are reporting a gross profit per unit, they continually report losing money on their year end financials with a net loss time after time. Their annual losses last year were $460 million. I believe the key to them staying in business is that they are making money on the financing side of it. They are essentially a finance company that happens to sell cars.

https://investors.carvana.com/~/media/Files/C/Carvana-IR/documents/events/q4-2019-cvna-shareholder-letter.pdf

Carvana improves Q4, FY 2020 revenue as losses widen

Carvana, an e-commerce platform for buying used cars that delivers cars to customers with a massive, coin-operated vending machine, boosted its revenue for Q4 and full year 2020 as losses widened over 2019, according to an earnings release. Revenue for…

www.vendingtimes.com

I wish I had bought some of their stock last year at this time when it tumbled to $22-$30. Lately, it's been in the $280 to $300 range, but dropping a bit.

That’s just how new businesses operate these days when they’re funded by venture capital. Sink massive capital into growth at a rapid pace. Amazon didn’t turn a profit for 14 years and it’s revenue was over $1b

 

[Aircal]

But Amazon had a market to itself once it got facilities up and running Carvana has Carmax. Who makes money on the backside with their own auctions. Has their own financial company. Ownership in the warranty company. Investments in repair facilities and price reporting. They also have done well with new car sales over the years should they make a decision to go back that direction.

 

[Dan00Hawk]

That’s just how new businesses operate these days when they’re funded by venture capital. Sink massive capital into growth at a rapid pace. Amazon didn’t turn a profit for 14 years and it’s revenue was over $1b

Carvana's continued growth is likely going to shrink unless they can keep expanding into lower populated areas, though, as they are in most of the major markets already. But with more consumers being willing to turn to online sales, it's an opportunity for Carvana to keep up their public profile, increase sales, and eventually turn a profit.

 

[frank]

Something is up with CarMax at the moment, inventory has been much lower then in the past, and they have sold off a few of their new car dealerships that they owned.

 

[Dan00Hawk]

Something is up with CarMax at the moment, inventory has been much lower then in the past, and they have sold off a few of their new car dealerships that they owned.

They've been in the process of getting out of the new car game for the past few years, as the profit margins for new cars aren't worth extending their contracts with those manufacturers, and they had to abide by the manufacturer programs instead of their own game plan. There was some benefit to their used car business line to be able to attend "manufacturer only" auctions in order to source lease returns and other factory type vehicles, but those perks weren't worth the rest of the headaches associated with being a "new car" store.

Also, used car demand is skyrocketing due to shortages in new car inventory due to manufacturing shortages. So car dealerships that traditionally rely on new car sales are having to source used cars. This is driving up the competition and cost of used cars. As a result, many places are lower on inventory than normal. As an individual, now is a GREAT time to sell your used car to a dealer to get a peak value. It's not a good time to go buy one however as you'll be paying higher prices as well...

 

[GLADIATOR]

View attachment 83785

I will create a thread that you can ignore. Don’t Fn read it.

 

[Yaj Yak]

Carvana's continued growth is likely going to shrink unless they can keep expanding into lower populated areas, though, as they are in most of the major markets already. But with more consumers being willing to turn to online sales, it's an opportunity for Carvana to keep up their public profile, increase sales, and eventually turn a profit.

They aren't going anywhere

 

[RedBeard]

Something is up with CarMax at the moment, inventory has been much lower then in the past, and they have sold off a few of their new car dealerships that they owned.

I had no idea Carmax even had new car dealerships.

 

[frank]

I had no idea Carmax even had new car dealerships.

Kenosha toyota is the last new car dealership that they own, which is currently up for sale.

 

[Aircal]

I had no idea Carmax even had new car dealerships.

They still have Toyotas new in Kenosha and out by DC. The east coast store is normally the 2nd largest selling Toyota dealership in the Country.

 

[frank]

They still have Toyotas new in Kenosha and out by DC. The east coast store is normally the 2nd largest selling Toyota dealership in the Country.

The dc / Maryland toyota store just sold last month. I believe it was in laurel?

 

[Aircal]

The dc / Maryland toyota store just sold last month. I believe it was in laurel?

Yep Laurel is right. Didn't know they sold it.

 

[Dan00Hawk]

Agree to Disagree
They aren't going anywhere

I don't think they will disappear either. I just stated a fact that they've had negative net income over the years and my opinion is that their growth level will slow down. And I said, "But with more consumers being willing to turn to online sales, it's an opportunity for Carvana to keep up their public profile, increase sales, and eventually turn a profit." So how are we disagreeing?

 

[Yaj Yak]

I don't think they will disappear either. I just stated a fact that they've had negative net income over the years and my opinion is that their growth level will slow down. And I said, "But with more consumers being willing to turn to online sales, it's an opportunity for Carvana to keep up their public profile, increase sales, and eventually turn a profit." So how are we disagreeing?

you said their continued growth will shrink, i doubt that.

Carvana's continued growth is likely going to shrink unless they can keep expanding into lower populated areas, though, as they are in most of the major markets already. But with more consumers being willing to turn to online sales, it's an opportunity for Carvana to keep up their public profile, increase sales, and eventually turn a profit.

I also don't fully understand "unless they can keep expanding into lower populated areas"

they're nationwide right? I mean, as long as the consumer has internet of course.

I just punched in my just sold truck after I said i lived in nowhereville wyoming

also im able to see vehicles i could purchase, if i was there.

 

[FESTER665]

I will create a thread that you can ignore. Don’t Fn read it.

 

[Yaj Yak]

But Amazon had a market to itself once it got facilities up and running Carvana has Carmax. Who makes money on the backside with their own auctions. Has their own financial company. Ownership in the warranty company. Investments in repair facilities and price reporting. They also have done well with new car sales over the years should they make a decision to go back that direction.

i disagree with this. carmax is the blockbuster to carvana's netflix.

i never considered going to take my truck to carmax- and there's a location under 30 minutes from my house. because i 1000% didn't want to make the hassle or take the time.

but punch in my vin online to see how much i could get sight unseen? fuck yeah i'll do that.

 

[OffshoreDrilling]

i disagree with this. carmax is the blockbuster to carvana's netflix.

i never considered going to take my truck to carmax- and there's a location under 30 minutes from my house. because i 1000% didn't want to make the hassle or take the time.

but punch in my vin online to see how much i could get sight unseen? fuck yeah i'll do that.

Bingo. They have a major technology advantage.

taxis and limos have existed for a long time. Uber came along and made an app so it was easy to hail one. They don’t make a profit yet either.

food delivery has been around forever too. You can call the pizza place and have a pimple face kid show up in 30min. Door dash, post mates, grub hub, etc made an app so you can do it all on your phone. None of those companies turn a profit.

the disruption is the technology, not the idea of buying or selling a car.

 

[Yaj Yak]

Bingo. They have a major technology advantage.

taxis and limos have existed for a long time. Uber came along and made an app so it was easy to hail one. They don’t make a profit yet either.

food delivery has been around forever too. You can call the pizza place and have a pimple face kid show up in 30min. Door dash, post mates, grub hub, etc made an app so you can do it all on your phone. None of those companies turn a profit.

the disruption is the technology, not the idea of buying or selling a car.

binnngo.

completely change an industry... uber, amazon, etc. flip an industry on it's head and there is nothing the other big players can do about it because once it's happening it's already too late.

 

[FESTER665]

Tried it for giggles.... Shocked its that high really.

 

[OffshoreDrilling]

Carvana has the first mover advantage. Other companies will adapt to add similar service to their current business and new ones will pop up too.

can’t stand anything to do with a dealership. It feels so scheisty about every part of purchasing, trading in or getting service.

 

[OffshoreDrilling]

Tried it for giggles.... Shocked its that high really.

View attachment 83812

Damn. I swear i was looking at sub 20k mile 2019s for like 17-18k two years ago when I bought the Prius.

 

[FESTER665]

Damn. I swear i was looking at sub 20k mile 2019s for like 17-18k two years ago when I bought the Prius.

Thats what I thought as well.

Might sell this thing and start walking the 3 mile commute.

 

[Lord Tin Foilhat]

i disagree with this. carmax is the blockbuster to carvana's netflix.

i never considered going to take my truck to carmax- and there's a location under 30 minutes from my house. because i 1000% didn't want to make the hassle or take the time.

but punch in my vin online to see how much i could get sight unseen? fuck yeah i'll do that.

did this with the cobalt, waste of an hour plus drive time

 

[FESTER665]

did this with the cobalt, waste of an hour plus drive time

Convenience means a lot for this whole thing. If literally all I need to do is have the car ready for them, why the hell not have them come and get it.