Collapse of Carvana; Is this the end of Bronco ADM

[TheShark]

I can't complain about Carvana, I sold three cars to them in the past year and a half, gave me more money than Carmax and were quick to deposit the money in my account. Don't think I would ever buy a car from them though.

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[AZ_Liberty]

Carvana is still listing 2-door Base Broncos for $16k over new MSRP.

As others have said, they are a tech company pretending to be a car company. Massive growth for "shareholder value" and when the growth stops whoever is holding the shares takes the hit.

Their theoretical profit model is "Drivetime on the internet". I.e. they never planned to make money selling cars, the money is is financing.

 

[Lowcountry Bronco]

I can't complain about Carvana, I sold three cars to them in the past year and a half, gave me more money than Carmax and were quick to deposit the money in my account. Don't think I would ever buy a car from them though.

Same here, sold one two years ago and bought one last year. Selling was definitely easier but the one I bought they made right in the end. I don't know how they've been over the last year outside news articles but I always had doubts that they were just a money laundering business so who knows what their business plan was.

 

[Garemlin]

They bought high and now they have to sell low. And they are going to lose their ass because of it. This has zero to do with ADMs on Broncos. That is pure greed by dealers with an opportunist attitude.

 

[LostInArizona]

I worked at Carvana as a consultant at their HQ here in AZ for a while. I built part of their inventory/order control system, basically a logistics integration system that allowed all the different apps that represent all stages of their order and shipping system to talk to each other. This touched many parts of their internal business, and I got to see the back end of how the whole process works.

I'm not saying my opinion here is the sole reason for their current predicament, but from my nearly 22 years of experience in this field I can tell you that like most "tech" companies they suffer largely from over-engineering and/or over hiring software developers, in addition to the obvious recent issues with the used car market itself. Their entire business model was basically based on programmatically automating the used car buying process. To that end, Carvana has always been more than competitive in this area as far as wages for software engineers, and they soaked up a LOT of good talent. They even stole 6 people from the company I am still at now, and tried to hire me as well. An offer I turned down because I knew the individual I would have been working for as he came from my company and I don't like him personally, but that's beside the point lol.

My point is that they tried to operate like Google or Facebook. Like just another typical tech giant, in that they over-hired, over-paid, and over-worked their engineers. But unlike the other tech giants, they deal entirely with physical objects, that have to be bought and sold, inventory maintained, repaired, shipped at HUGE cost, and so on. Their enormous and fast growth as others have mentioned was based on the growth potential alone, and when the used car market started drying up, so did their profit margins. Because it's damn near impossible to operate like a tech giant, technically speaking, with that kind of overhead. Most of what they do, could be done with 1/4th the people and infrastructure, but with recent events they got stuck with 1000s of over-paid software developers. I mean in the 100,000 sq/ft office we were in, they had at least 100 BI (business intelligence) devs, doing nothing but analysis and reporting. I'm not sure if their ultimate goal was to pull like a Facebook and start doing massive amounts of analysis and advertising to people, but that doesn't seem specifically necessary to me in that business. Standard advertising practices and focusing on customer service and customer experience should have been sufficient.

I found out recently, that guy I would have been working for, sold his stock options while they were still high, drives a Ferrari, and doesn't need to work anymore. Not sure I would have been so lucky had I taken the job there, but after seeing the news lately, I am thankful I didn't.

 

[Silver-Bolt]

Not to defend Carvana, but how long did Amazon run on hope and investor money before it turned a profit?

Amazon started by selling books out of a garage. They were profitable from day one.

 

[LostInArizona]

Amazon started by selling books out of a garage. They were profitable from day one.

Microsoft and Apple started out of a garage as well, maybe all you need is a garage and the will to see it through lol!

 

[BostonSasquatch]

Amazon started by selling books out of a garage. They were profitable from day one.

We're discussing Broncos, mostly, and the car market, to another extent, but checking Wiki I was told that Bezos did start his business in his garage (like that college drop-out, Bill Gates) in 1995, but didn't turn a profit until the last quarter 2001. My point, dear friend, is that a persuasive business model will attract investors. Some of these will succeed; others, not. That is capitalism, and (getting philosophical here), over the long-haul, and for most people, capitalism works.

I kind of hope Carvana, for all its faults and problematic history, succeeds, as it strikes me as an efficient model to match vehicles to people who need them--like ridesharing does for local transit, much as I feel sorry for those cab drivers who must find other jobs.

As a prominent news commentator (whom I must not name, for I fear the wrath of the censors here) once said, (paraphrase), "Henry Ford put a lot of buggy whip manufacturers out of business. Was that a bad thing?"

 

[LostInArizona]

I kind of hope Carvana, for all its faults and problematic history, succeeds, as it strikes me as an efficient model to match vehicles to people who need them

This is kinda my thought. What they do is good for the market in my opinion. And if it puts a few skeevy used car dealerships out of business along the way, it is still progress. I would argue if Carvana was allowed to sell new cars, none of this would have happened and Carvana would be in a good place right now. But we all know why that can't happen.

 

[Bronco4Me/Miami]

I love CARVANA, I know the problems and bad experiences some people on here have had but when my first Bronco order got messed up, I still got it, just not the way I wanted it and I reorder it immediately with the right configuration, and was lucky enough to only wait 4 months for my new Bronco done right. Put about 3000 miles on it, and the day my new Bronco was ready to be picked up from the dealer I went to CARVANA and they gave me 10K over what I paid for it (paying for my new upgrades) and they even paid for my Uber back to my dealer to pickup my new bronco, it was beautiful so yea I don’t see how they can stay in business and make a profit once the market starts softening

 

[NewBroncoOwner]

Sadly we will not see prices drop until liquidation is a must for CARVANA. $53k for a base 4 door is ridiculous

 

[RangerR]

I think the way and speed at which the car market has shifted will put a number of companies in trouble. Dealerships have long deep money and backing. Carvana and Vroom are not a deep with backing. Inventory is coming back, inflation has slowed the pace we buy cars, interest rates are up. All bad for the market. Generally these are not good for any of us, some are impacted less. When I placed my Bronco order the interest rates were 2%ish. Now they are are closer to 5%. I was able to purchase a Jeep Gladiator with 0% in the summer, so the Bronco might not happen for us.

 

[OCNORB1974]

Might be some inventory coming soon.

“Since announcing its quarterly results on Nov. 3, Carvana (CVNA) shares have lost 44% of their value and are currently trading at $8.06 versus $14.35 on that day. This translates into a decline in market capitalization of approximately $1.1 billion in two weeks. Carvana currently has a market value of $1.43 billion.”

https://apple.news/AM2671y5OTTuHTrTG7jvcfA

This has nothing to do with ADM on new vehicles. This is a USED car seller versus Ford, a NEW car seller with a product that is high in demand. How would their demise mean that a high volume new vehicles ADm would go away????????

 

[Letagoavs710]

They just paid us 13K last week for a car I bought for 13K, 5 years ago. So they’re still spending money and I’ll gladly take it.

 

[TheShark]

I really hope they do make it because it gives us one more outlet to dispose of a used car. Think back to the old days before Carvana, Carmax, or Vroom, you basically had a choice of trading in your car with a dealer or selling it outright which has its own issues. I've used Carvana and Carmax offers as leverage with car dealers when trading in a car. They always low ball me and in the end every one of them matched the Carmax or Carvana price. I also get why people like buying from them, no hassle or pressure, sure you probably paid more but you didn't have to sit in a dealership for half day going through the third degree trying to negotiate a price with a salesman with a pinky ring and grease stain on his collar.

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