Carvana Layoffs

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"We believe these decisions, while extremely difficult, will result in Carvana restoring a better balance between its sales volumes and staffing levels and facilitate Carvana returning to efficient growth on its mission to change the way people buy and sell cars," the company said in the filing.
The layoffs relate to “recent macroeconomic factors that are significantly impacting automotive retail,” a Carvana spokesperson said in a statement.

They come just weeks after Carvana reported a $506 million loss in the first quarter as high used-vehicle prices, rising interest rates and other issues affecting the auto industry dented sales. It felt higher costs and a lower profit per vehicle than expected.

It’s not just Carvana taking a hit in the tumultuous market. Digital retail companies that received a long period of boosted sales and elevated customer interest during the COVID-19 pandemic are now seeing some cooldown, and it’s reflecting in their earnings.

 
The entire used vehicle industry has been upended. Privately owned used car (only) dealers are going out of business in droves. Used vehicle auctions are also struggling, and many of them are going under as well.
 
Who knew that paying too much for cars without a proper inspection, then trying to sell the same car above market pricing, would be a poor business model? I've also heard that Carvana sends more cars than any other dealer through auctions to try to recoup some cost. Not a great way to operate if sustainment is the goal.
 
In a booming used car market...Vroom and Carvana are losing money. It takes great business sense to do that.......
The problem is the severe supply side shortage. The used vehicle shortage is not getting better, it is getting worse, and now there is pushback on the prices. Furthermore, lending institutions are now balking at financing such large amounts on such old high mileage vehicles, and customers are balking at having to come up with high down payments and paying higher interest rates for longer terms. It is a perfect storm for the used vehicle industry.
 
There is NO used vehicle shortage where I live.

Want a used truck? This dealer has over 300 in stock: https://www.chillicothetruck.com/

Used vehciles of all sorts? This Columbus, Oh dealer has over 600:


Want a used vehicle? Germain Kia of Columbus has over 200:

Available Used vehicles are all over the place in Central Ohio.
 
The problem is the severe supply side shortage. The used vehicle shortage is not getting better, it is getting worse, and now there is pushback on the prices. Furthermore, lending institutions are now balking at financing such large amounts on such old high mileage vehicles, and customers are balking at having to come up with high down payments and paying higher interest rates for longer terms. It is a perfect storm for the used vehicle industry.

It's my understanding Carvana never had a lack of inventory-but they did pay top dollar for the one's they bought from the public. The first of the year-used car prices have actually DROPPED-but this month have been going up-again.
quote-
Used car prices trends for 2022 have been interesting. In 2021, unlike any other time in history, used car prices increased. What used to be a depreciating hunk of metal, was an appreciating asset that nearly had a better rate of return than Bitcoin. With used car prices increasing at rapid rates, it’s never been more important to track the value of your car.

So far in 2022, used car prices have fallen. However that trend is coming to an end. As of May 2022, used car prices have begun appreciating again. During the first quarter of 2022 used car prices dropped nearly 5% on the wholesale markets. Now they are rising again.
 
There is more than one story online, with Carvana paying more for a used car than they cost when new, then listing it for less than then paid.
As I said-it takes great business acumen to do that-because as a trend prices haven't fallen.
 
No surprise this happened,

CARVANA is a portmanteau. From Webster; 'nirvana'

: a goal hoped for but apparently unattainable : DREAM🌤️
 
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carvana 21700, vroom 22800, webuyanycar 23400

CARMAX!
image_2022-05-10_201729058.png


That is what I paid new.. has 55500 miles on it. 4 years old this month.

Of course a new one is around 38k now.

Base FWD COMPASS is 30k ugh.
 
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About nine months ago, I read an article that Carvana's main business WAS NOT SELLING CARS, but CARVANA's main business was the bond business. CARVANA packages auto loans and sells the packaged loans in a form of bonds. Furthermore, Carvana serviced many of the loans they packaged into bonds. Carvana could be profitable if every vehicle they sold was at a loss, as long as they had financed the loan. The real money to be made was not in the sales price of the car, but in the financing of the car. Carvana was able to bypass the financial institutions in its business model, and double dip by servicing the loan for the bond holders.

Not sure Carvana's model is working for them, but Ford and Chrysler (when it was Chrysler) finance companies were often the most profitable part of their holding companies' segments.
 
They lose $$$ on every sale but they make it up on volume!
Interesting how that doesn't work.

In the late '70's, there was a Colonial Ford dealership in Salt Lake City. They had a beautiful new facility right in the heart of SLC. Huge inventory.

They advertised that they would beat the price on any new Ford. Their business model was that what they lost on profit for individual sales, they would make up in volume, by being the number 1 in sales for the region. And they sold a LOT of cars. But they still went bankrupt.

They were a huge example to other new car dealerships in the area, for many, many years. I suspect they may still be discussed in training and sales meetings to this day.
 
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