In reply to Ovid_and_Flem :
Soon enough.
For an appliance though, I think carvana may be on to something, just wish I could see one of those vending machines in person.
In reply to Ovid_and_Flem :
Soon enough.
For an appliance though, I think carvana may be on to something, just wish I could see one of those vending machines in person.
CobraSpdRH said:This almost seems like a new take on CarMax, with CarMax serving as the "Blockbuster" and Carvana serving as the "RedBox/Netflix" lol
It seems like this could benefit a lot of people and remove a lot of the hassle and stress of car buying. I see their offerings come up in my searches regularly and don't think they are too overpriced in comparison to others. I wonder if you are able to go and test drive vehicles in those displays without actually arranging all the financing?
I see one of the vending machines off I-4 when we head in and out of Orlando, seems neat and good Marketing.
Interesting choice of companies to choose, and I bet that was intentional.
Blockbuster was pretty much the same as any other video rental store out there, just on a national scale. Like CarMax is to selling used cars.
RedBox and Netflix changed the interaction between the video and consumer, in many ways- mostly in the delivery of the product. Like Carvana is to selling used cars.
And currently, how many Blockbuster stores do you see, compared to RedBox boxes, let alone the media giant Netflix is. One wonders if Carvana changes the game so much to have the same general effect.
JG Pasterjak said:I think the "not being comfortable buying a specialty car this way" feeling is more me wanting the process of buying a "fun" car to be more engaging and personal. But, yeah, in most cases one GS is going to be as good as the next GS. If I was looking for anything modern like that I'd definitely feel this was a viable option.
When the car you're shopping for is essentially an appliance and have similar levels of reliability, a similar method of purchase and delivery is a viable business model. That said, I can imagine there is a lower limit to the sale price where the profit margin does not support the infrastructure. Much the same way Car Max typically does not sell inexpensive cars (it looks liek the cheapest cars on Car Max are some Smart cars between $6 & $7K).
alfadriver said:One wonders if Carvana changes the game so much to have the same general effect.
Years ago--several, in fact--I was talking with a COO of a car company. It's one that many of us hold dear. I might have been drinking as it was during a press intro.
"No matter how good your car is," I might have said, "the buying process usually stinks."
The video rental analogy is a good one. The mom-and-pop video rental shops were replaced by Amazon. Then we had Redbox. And today it's all streaming. But at the end of the day, people still want to watch movies.
bit of a car jack. I mean thread jack but I came upon an article about new cars and Costco a few days ago. I'll link below.
With Carvana they only had four door Altimas and no coupes. That could simply be the age of the youngest coupe starting to get up there and also I've never seen a pampered one mostly beat ones unfortunately.
I could of course use their alert system JG mentions. I have a weird like for these cars and believe me unless I was buying one for any more than $5k I'd want a good one with a no hassle purchase too. 
now for the Costco article. not a Canoe.
Hey J.G. I noticed in the article you mentioned plugging an OBDII reader into the Leaf. Being a pure electric car, was there even anything there to see? On a gas car it's all parameters related to engine and emissions, but the Leaf shouldn't have emissions...
ShawneeCreek said:Hey J.G. I noticed in the article you mentioned plugging an OBDII reader into the Leaf. Being a pure electric car, was there even anything there to see? On a gas car it's all parameters related to engine and emissions, but the Leaf shouldn't have emissions...
TONS of data available with this app:
http://www.electricvehiclewiki.com/wiki/leaf-spy-pro/
Condition of each battery cell, overall battery capacity, total number of cycles on each cell, all kinds of stuff. It's a $20 app that I would never inspect a Leaf without.
AngryCorvair said:4 new users since this article was posted, and their only posts are in this thread. fascinating.
The auto industry has gotten into sock puppets big time. Like over at J--------k a ton of the comments have taken on that kind of "nasty PR" tone where the person kind of seems like an idiot but also has a certain business acumen to their tone that an actual idiot doesn't. Normally that doesn't happen here, but an "industry-wide" type of article such as this will attract them in a way that an autocross tire shootout won't.
alfadriver said:AngryCorvair said:4 new users since this article was posted, and their only posts are in this thread. fascinating.
Without posting Robbie's nautical picture, I thought that was interesting, too.
Probably has something to do with search rankings for Carvana + review. Googles search algorithm prefers newer content, from sites with a high domain authority, with a good sized word count. All items this site and article have.
Interesting review JG. I can't say I'd be opposed to trying it as I also detest the normal car buying process. I'm going to be stealing the "assembly line of idiots" line.
Carvana has billboards around here. Didn't know what they were about as a business until I read this article. Well done.
Anything that sticks another needle in the withering balloon that is the Universal Car Selling Method will be embraced by me. Unfortunately I'm probably not in their demographic as I don't spend more than $10k on daily driver dullsville cars. The general populace, however, will adore this business model once the word gets out.
GCrites80s said:AngryCorvair said:4 new users since this article was posted, and their only posts are in this thread. fascinating.
The auto industry has gotten into sock puppets big time.
I've been hands-off with those accounts so far... and figured with it being J.G.'s article, that it was his judgement call to make. But, I'm happy to drop the hammer if requested.
My feeling is that the more sock puppets get called out rather than just deleted it lends a permanence to their illegitimacy. Obviously if they are saying offensive things of if things get really out of hand they need to go. Usually the reason they are dispatched is that their position has a chance of becoming weaker. I could be wrong though... there's always the "as long as it was said, it's legitimate" school of thought that seems to be popular among some people.
Also, sock puppets prefer article comments sections over forums since articles tend to drop off of Google results quickly and don't see the kind of long discussions that can take years to play out that forums do. Here, comments sections and forums are one and the same. So don't be surprised if we don't hear from them again in this thread.
Anyway... as it stands right now Carvana does seem like a cool company that can help people get cars from their entire region rather than just their own town quite easily. But, their willingness to pay top dollar at auctions could eventually raise the price of cars for the average individual. On the other hand, they might be able to accept a lower margin on cars since they don't have all that real estate to deal with and a lot of support staff to pay.
For J.G. and others that have used the service, what were the F&I proposals you received, if any? That stuff is a big profit center for traditional dealerships and I was wondering how that was handled by Carvana.
GCrites80s said:For J.G. and others that have used the service, what were the F&I proposals you received, if any? That stuff is a big profit center for traditional dealerships and I was wondering how that was handled by Carvana.
There was really only one "built-in" option and that was financing with Carvana's in-house finance arm, which is called Bridgeview, or Bridgecrest or something like that. You can bring your own financing, but it lengthens the process a bit since there's more paperwork that has to cross more desks.
I filled out the app and was offered a rate that was about .6% over what I was paying with mt credit union (4.0% vs 3.4% for 60 months). It was the difference of like $6 per month on the loan, and I'm going to pay it off more aggressively than the actual terms anyway (I'll pay it off in about two years at my curent rate). If I ever get really bugged by not having the absolute best rate possible I can always just refi with my credit union. I tend to go for a little longer term and keep my base payments down, then just get really aggressive on the payments when i can. But being married to a teach who has no paycheck in the summer, it's always nice to have the option of a really reasonable base payment as we get deep into that period before school starts back up.
sleepyhead said:GCrites80s said:AngryCorvair said:4 new users since this article was posted, and their only posts are in this thread. fascinating.
The auto industry has gotten into sock puppets big time.
I've been hands-off with those accounts so far... and figured with it being J.G.'s article, that it was his judgement call to make. But, I'm happy to drop the hammer if requested.
Yeah, I'd say leave them for now unless they start getting nasty. It's good that they're getting called out, and I think it actually adds another layer of intrigue to the story having them be so obviously here to stir poo. Or maybe they're real? I'm sure there's just TONS of people willing to go to bat to defend that much-beloved, hallowed institution known as traditional car dealerships.
Ian F said:JG Pasterjak said:I think the "not being comfortable buying a specialty car this way" feeling is more me wanting the process of buying a "fun" car to be more engaging and personal. But, yeah, in most cases one GS is going to be as good as the next GS. If I was looking for anything modern like that I'd definitely feel this was a viable option.
When the car you're shopping for is essentially an appliance and have similar levels of reliability, a similar method of purchase and delivery is a viable business model. That said, I can imagine there is a lower limit to the sale price where the profit margin does not support the infrastructure. Much the same way Car Max typically does not sell inexpensive cars (it looks liek the cheapest cars on Car Max are some Smart cars between $6 & $7K).
Never again. Until the next time...
Oddly I was thinking that a startup would fill this low priced niche for used car dealers someday. A database of used cars bought via the web with used car lots buying into the program in the same way used parts are listed for savage yards. The shipping and paperwork could be standardized across dealerships. It would snag customers that wouldn't surf every used dealership website in 100 mile radius.
As an aside, I have started to see the Carvana trucks, both rollbacks and large carriers, here in the midwest recently.
GCrites80s said:AngryCorvair said:4 new users since this article was posted, and their only posts are in this thread. fascinating.
The auto industry has gotten into sock puppets big time. Like over at J--------k a ton of the comments have taken on that kind of "nasty PR" tone where the person kind of seems like an idiot but also has a certain business acumen to their tone that an actual idiot doesn't. Normally that doesn't happen here, but an "industry-wide" type of article such as this will attract them in a way that an autocross tire shootout won't.
Now I'm picturing a flashing alarm displaying a big Carvana logo going off deep in the bowels of the office of a shadowy conspiracy of traditional car dealers, and a battalion of salesmen with polyester ties and stiffly moused hair rushing through the halls to their keyboards to bang out troll posts.
I think the reality is more like some unemployed neckbeards getting a Google alert, but your description plays to my '90s sensibilities. I also picture outdated mustaches and fast gum chewing.
In reply to AngryCorvair :
I created my account specifically to reply to this article as someone with recent firsthand experience.
The existing dealership model with commission based sales is arduous and off-putting. By the time I get to a dealership, I know what I want, and how much I'm willing to pay for it. It's time for that model to go the way of the dodo.
You weren't one of the users targeted with that post; "SSR Corvette" is going to get you out of that one for sure.
GCrites80s said:I think the reality is more like some unemployed neckbeards getting a Google alert, but your description plays to my '90s sensibilities. I also picture outdated mustaches and fast gum chewing.
My own bet would be that they're either from a country that has a good supply of English speakers and a short supply of good wages, like India or Nigeria, or the posts are created by a computer running an artificial stupidity algorithm. Reality often isn't nearly as amusing as imagination. But Carvana is welcome to my idea if they want to take the scenario in my head and play it on your television.
I read this article last night and it made me think of this thread. Interesting to learn the background of the founders.
In April, Ernest Garcia II, a 60-year-old convicted felon, stood next to his son as Ernest Garcia III rang the bell of the New York Stock Exchange. For decades, Garcia had been careful to stay out of the public eye, but with the initial public offering of Carvana he was ready to openly celebrate a crowning achievement.
Garcia’s business career has included personal and corporate bankruptcies, overseeing a stock market debacle, and many years of selling used cars and making subprime auto loans. His 1990 criminal fraud conviction stemmed from the small role he played in the Charles Keating scandal involving Lincoln Savings & Loan.
Today, Garcia operates DriveTime Automotive, the fourth-biggest used car retailer in the country, and he is separately the biggest shareholder of Carvana, a used car e-commerce company with a hot stock. He borrows big money from the nation’s largest banks, owns an apartment in Trump Tower, and has struck relationships with the likes of former U.S. Vice President Dan Quayle and Mark Walter, one of the most powerful billionaires on Wall Street.
Incredibly, Garcia himself is now a billionaire. Forbes estimates his net worth at $2.5 billion. DriveTime, which sells used cars and is in the sometimes-controversial business of making auto loans to low-income consumers, has seen its business grow 19% annually in the last decade. With shares of Carvana up 46% since its April IPO, Garcia’s stake in Carvana alone is worth $1.5 billion.
With Garcia’s son, Garcia III, as CEO, Carvana has been promoted as the “Amazon of cars,” a Phoenix-based technology platform for buying and selling used cars. Consumers can use its web site to buy used cars, obtain financing and arrange for vehicle delivery. Carvana also has eight glass tower vending machines that are as high as eight stories located in cities like Atlanta and Houston, where customers can inspect and pick up purchased used cars.
With revenues of $594 million in the first nine months of 2017, up 130% from the same period last year, Carvana is growing fast. It also lost $57 million in the first three quarters of 2017 and is burning through cash, forcing it to continue raising money. Wall Street short sellers are betting big that the stock will collapse. But other large financial players have bought into Garcia’s latest stock market play and keep providing it with fresh cash injections. Garcia declined to comment for this story.
The son of a liquor store owner who was for a while also the mayor of Gallup, New Mexico, Garcia was on the golf team at the University of Arizona. He dropped out of school before graduating to become a stock broker and eventually turned to real estate development in Phoenix. One of his lenders was Lincoln Savings & Loan, which was controlled by Charles Keating. Its failure sparked a political scandal because of Keating’s connections and interactions with five U.S. senators.
At 33, Garcia pleaded guilty in 1990 to a bank fraud charge related to his dealings with Lincoln Savings & Loan. He was sentenced to three years of probation, agreeing to cooperate with U.S. government lawyers prosecuting Keating. Both Garcia and his firm filed for bankruptcy protection.
Garcia’s financial comeback started with Ugly Duckling, a rental car chain he bought for less than $1 million. After failing to turn the business around, Garcia merged it with a tiny finance company and built it as a seller and financer of used cars for people with poor credit histories. As the stock market roared in the 1990s, Garcia had Ugly Duckling raise $170 million by conducting an IPO and then issuing more shares.
Forbes first wrote about Garcia in 2001, as he was preparing to take Ugly Duckling private after its stock priced crashed from $25 to $2.50. Garcia ended up with full control of Ugly Duckling, buying the shares he didn’t own for $18 million. At the time, the company had annual revenues of $600 million. He hired Raymond Fidel, who eventually became CEO, and renamed the company DriveTime Automotive. Fidel also pleaded guilty to a felony charge connected to the Keating scandal.
The deal has been a huge winner for Garcia. DriveTime now generates annual revenues of some $2.5 billion and is extremely profitable. Garcia recently declined offers to buy DriveTime for just under $1 billion, according to an individual familiar with the matter. The company has securitized billions in auto finance receivables and has bank lines with Wells Fargo and Citigroup.
Some consumer protection advocates have argued that companies that both finance and sell used automobiles too often put consumers in cars they cannot afford. The average DriveTime customer makes between $37,000 to $50,000 a year and has poor credit history. In the recent past, at least 45% of DriveTime’s auto installment contracts were delinquent at a given time, prompting DriveTime’s 370 or so collection employees in the U.S. and Barbados to start calling consumers behind on their payments.
DriveTime certainly gives some people their best shot at owning a car so they can get to their jobs and other places. But the Consumer Financial Protection Bureau said three years ago that DriveTime “harmed consumers by making harassing debt collection calls and providing inaccurate credit information to credit reporting agencies.” The federal consumer protection agency brought an enforcement action against DriveTime in 2014, forcing the company to pay an $8 million civil penalty. For Garcia, it was a speed bump.
Garcia’s son, Garcia III, joined DriveTime after earning his engineering degree from Stanford University. He started building Carvana as a subsidiary of DriveTime in 2012, buying most of its used car inventory from its parent, which purchased Carvana’s loans and supplied it with other financial support and technological assistance. DriveTime later spun off Carvana, which no longer purchases vehicles from DriveTime. In order to keep his controversial past away from Carvana, Garcia did not become one of its directors or officers, but Garcia and his son remain close. They even live directly next door to each other in Phoenix.
Garcia III, 34, is Carvana’s CEO, and owns $600 million of Carvana stock. His dad remains the company’s biggest shareholder and the duo have full control due to their super-voting shares. Another major shareholder is Mark Walter, the billionaire CEO of Guggenheim Partners, the financial firm with $295 billion of assets under management. Walter’s CVAN Holdings started buying convertible debt of Carvana when it was a private company in 2015 and converted it into shares at the IPO that are now worth $300 million. Another entity Walter controls, Delaware Life Insurance, has provided financing, buying $23 million of securities backed by Carvana automobile finance receivables.
With help from big banks like Wells Fargo and Bank of America, Carvana raised $225 million in its IPO. The company transferred $35 million to Garcia’s investment firm to repay a loan that carried a 12% interest rate. At the same time, former U.S. Vice President Dan Quayle, who has a relationship with Garcia, hopped on Carvana’s board.
Bloomberg News noted in June that Garcia’s felony conviction was not disclosed in Carvana’s Securities & Exchange Commission filings. Although he is not an officer or director of the company, the Bloomberg News report implied that maybe Garcia’s conviction should have been included in securities filings. Carvana has also agreed to pay Garcia, Walter and other pre-IPO shareholders 85% of the tax benefited associated with the IPO, estimated at $1 billion, Bloomberg also reported.
After finishing September with $142 million of cash, Carvana was back raising funds by selling preferred stock in a private placement, $100 million this time from Tom Dundon, the Dallas businessman who made a fortune making subprime auto loans. Separately, Dundon just struck a deal to buy a majority interest in the Carolina Hurricanes of the National Hockey League.
Still, there is plenty of skepticism of Carvana on Wall Street. There are 9.7 million shares sold short, making the short interest a whopping 70%. Those betting against the stock have focused on Carvana’s cash burn and big financial losses. Carvana is directly up against giants like CarMax and well-funded start-ups like Vroom. Beepi, an online used car marketplace based in Silicon Valley, shut down this year after burning through $150 million. Carvana has been spending cash aggressively to incentivize customers to buy cars—for example giving $200 for those wishing to fly to a town with a Carvana vending machine and inspect a car before purchasing it. The company has also been spending big dollars on TV advertising. In online pieces, the shorts have also focused on Garcia and the stock collapse of Ugly Duckling.
“Dealerships generally can kind of get up and running and get to profitability fairly quickly because they have heavy variable costs and relatively low upfront investment costs,” Carvana CEO Ernie Garcia III said at a Goldman Sachs investor conference in September. “We've got a lot of upfront investment costs and then very low variable costs.”
Garcia himself seems to be a believer. He has funded Carvana with at least $100 million of start-up capital, SEC filings suggest. After Carvana’s stock plunged immediately following its IPO, he purchased another 465,000 shares at prices between $8.19 and $8.92. The stock recently changed hands for $21.87.
In reply to dyintorace :
Still the land of opportunity.. cool story
I work at a dealership an mostly dread anytime I have to deal with a salesperson. Something has to change for this sales format to survive. And Carvanna? All I know is Carvanna spams the heck out of CL local to me.
jj said:Just checked Carvana website for a car my wife wants. They want $18,400 for 2013 BRZ. That's about $3,000 over high book.
Yikes! No thank you. But I will keep checking back because the process seems so painless.
You're paying for the convenience of it. Just like buying a gallon of milk at the gas station vs going into the grocery store.
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