https://apple.news/Adkr2-GqJSKWEontxkIi9Rw

Carvana, the used car dealer founded a decade ago whose meteoric growth was met with a fair number of problems, said Tuesday that it would lay off 2,500 employees, with executives going unpaid for the rest of 2022. …

Carvana layoffs are due to poor management. The other used car giants are making money hand over fist.


Not saying there is no recession, but this isn't proof of it.

They prolly can't get inventory.

Just like everyone else.

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They prolly can't get inventory.

Just like everyone else.

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Probably worse - b/c their model relies on people wanting to unload their vehicles and are willing to sacrifice convenience for sales price. Right now the market is so inflated, used car dealers are bidding up prices for cars. Carvana is getting squeezed.

They are a relatively high cost operation, for many reasons, and their main problem right now is that high cost plus high used prices means less buyers willing to pay their premium, imho.

Anyone can get used car inventory, the issue is always flipping that inventory for a profit. I dunno if it is really a fair comparison, but I consider carmax a similar outfit, and they seem to be growing market share, sales, and profit per unit.

Maybe that tall car carousel with glass all around was more expensive than an asphalt car lot. Who knew!

Good. They offered me $100 for a car that I sold to Carmax for several thousand.

It's a car vending machine
Next year they were gping to have you get your car with a giant car claw

I wouldn't feel too bad for them, literally the same day they announced they were spending $2.2 billion to buy a car auction company.

Garrelli 5000 said:

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Good. They offered me $100 for a car that I sold to Carmax for several thousand.

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Yeah, **** those 2500 people who had no control over the lowball offer for your ****mobile

So what was Carvana's new angle for car buying/selling? Convenience right from your couch. Which means it costs more for them to provide those services, and the seller/buyer needs to accept worse deals through Carvana to pay for that convenience premium.

And on top of that Carvana was absolutely overpaying for cars on the aggregate scale. They needed inventory to flip.

So Carvana wound up with an adverse selection problem. People who value convenience from an app over best value don't track with A) good car owners or B) people selling valuable used cars. Also, its way easier to push your junker through the Carvana process than carmax or selling it to another person directly. Carvana also misses out on competing with car dealerships who can use the used car price to reduce their new car sales price and save sales tax on the new car. Remember, they didn't have inventory originally so to build up inventory you have to have people sell you their car that don't buy a car from you. Thats a 7-8% delta from the get go that Carvana had to absorb compared to an established dealer.

My take, I would only use Carvana to dump an overpriced car thats starting to have problems. Which is a problem with the used car market once you get outside of warranty periods anyways.

I started this in the wee hours ... stress job and wasn't sleeping. Perhaps Carvana business model does not actually work well in the market and thus is getting sized. Lots of people who almost won't leave their house/couch for anything.

News of massive layoffs to me generally means recession. The packages as outlined seem to be generous; 4+ weeks of pay plus health care. Not too bad and the best workers will be in the game fast.

Have you not paid attention to the post-COVID cycle that stay at home plays are going through?

Better.com laid off 3000 people a few months ago in the middle of a flaming hot housing market.

Peloton laid off a few thousand earlier this year.

Carvana has had a grand total of one profitable quarter since it went public and that was due to being in the right industry at the right time last spring.

Picard said:

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Maybe that tall car carousel with glass all around was more expensive than an asphalt car lot. Who knew!

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Ha, came to post the exact same thing.

Carvana stock up 40% today, 1000% for the year.

https://finance.yahoo.com/news/carvana-stock-is-up-1000-this-year-leaving-short-sellers-with-a-2-billion-loss-162312603.html

Used cars are beginning to tumble in price... will be interesting to watch.

I worked for a company that decided to sell some older Ford Transit vans (1-2 years ago). The owner of the company was originally going to sell the vans for some crazy amount to an acquaintance of his, but that acquaintance said those vans were not worth what my boss was asking. My boss said he could get that price at Carvana, and ended up selling the vans to Carvana.

Later my boss was telling me how he went to one of those Harvard breakfast lectures and the CEO of Carvana was there. The Carvana CEO basically said all Carvana needed to do was make about $200 a car. There goal was to soak up as much market share as quickly as they could. The strategy was basically moving a lot of volume to make those profits with such small margins, and once they control the market the could raise prices. I suppose it's an okay strategy when you got investors & wall street pumping money into your stock, but once that goes dry you're screwed.

I know, cool story bro.