And how did the pros at CarMax do in the Crisis?
By Wolf Richter for WOLF STREET.
Vroom, whose shares plunged nearly 20% afterhours today, belongs to a new breed of used-vehicle dealers that sell cars online. On the first day of trading after its IPO two months ago, amid a crazy surging stock market, its shares “popped” 117%. From the IPO price of $22, shares then soared to a closing high today of $69.01, before the afterhours plunge to $55.56 a share.
Back in the day, we said that if you can’t make money selling used cars, you can’t make money in anything. But this new breed of used-car dealers – because they’re ecommerce tech companies or something, and not car dealers – are walking on water and don’t need to make money. So they’re losing money relentlessly, selling used cars. But this time around, it was particularly bad.
Buying a used car online and having it delivered is still not common in the US. About 0.9% of total used vehicle sales occur online, according to Vroom’s Prospectus filed before its IPO. So change is afoot. But good lordy. This is how much Vroom has been losing, selling used cars:
- In 2018: lost $98 million on $855 million in revenues.
- In 2019: lost $276 million on $1.19 billion in revenues
In the first half of 2020, it lost $104 million on $629 million in revenues. Compared to the first half in 2019, the loss was up 72% and revenues were up 27%.
You see where this is going: the more it sells, the more it loses, and this in the used-car business.
But Q2 was special: Supply shock & demand shock.
In its report today, Vroom said – and this is interesting:
“In response to the drop in demand and uncertainty around vehicle pricing early in the pandemic, we chose to de-risk the business by significantly reducing our inventory during the first half of the quarter.”
OK, Vroom is into ecommerce and wasn’t impacted by the lockdown in March and April, but people stopped buying used cars, and Vroom, along with the entire industry, stopped replenishing their inventories and stopped going to the auctions and stopped buying more used cars. And they sold what they had to trim down their inventory, and they made deals to get rid of these cars.
But then the stimulus checks hailed down on consumers and made great down-payments for auto loans, and suddenly people were buying used cars again. And so Vroom went on:
“As demand increased and pricing became more stable through the second half of the quarter, we pivoted to start rebuilding inventory and continue to do so.”
Vroom went out there buying used cars so that it would have something it could sell. And this happened nationwide. But it was too late:
“These lower inventory levels prevented us from fulfilling all of the demand that materialized in the second half of the quarter.”
They all did the same thing at the same time.
Before the Pandemic, between 109,000 and 116,000 used vehicles, up to eight years old, were sold every week at auctions around the country, according to J.D. Power. But sudden, in mid-March, volume collapsed, and by the week through April 5 was down 84%, to just 18,000 units, as the market had frozen up, with dealers not buying and sellers not sending their vehicles to the auction, and auctions shutting down because of safety concerns.
Then auctions transitioned to electronic venues and figured out social distancing. Dealers showed up again, and sellers showed up again, and volume soared to pre-Pandemic levels. This chart of weekly auction volume from J.D. Power shows this chaos, the 84% plunge, the bounce-back, and the tapering off again as dealers largely finished replenishing their inventories:
During the freeze-up, used-vehicle wholesale prices dropped, and then during the bounce-back, wholesale prices surged and hit record highs in July, but those price increases appear to be tapering off now.
Surging wholesale prices mean higher costs for dealers, which squeezes their profit margins when they retail the units. But that impacts all dealers, not just Vroom.
Whiplash.
There was a demand shock, as people stopped buying cars. Dealers shed inventories to deal with the demand shock and stopped buying at auction. Sellers stopped selling at auction. And auctions shut down. This created a supply shock on retail lots. And suddenly dealers realized that demand was coming back, and that they’d run out of cars, and they all ran back to the auction at the same time, and prices – their costs – soared. This is what used-car dealers were up against.
But Vroom, being a tech company or something and not a used-car dealer, got totally mauled by cutting prices. In Q2, Vroom, on its ecommerce platform:
- Sold 6,713 vehicles, up 74% from a year ago.
- At an average selling price of $25,393, down by $5,356, from $30,749 a year ago.
- For a gross profit of a risible $314 per unit, down by 75%!
- Additional gross profit of $761 per unit from “product” sales, such as finance and insurance products, up 23%.
- Total gross profit of $1,075 per unit, down 43%, from $1,892 a year ago.
But there is more…
Back in 2015, Vroom acquired a used-car dealer with a brick-and-mortar presence in the Houston area, Texas Direct Auto (TDA). In Q2, TDA:
- Sold 1,110 units, down 60% from a year ago.
- For a gross profit of $778 per unit, down 62.7% from a year ago.
In addition, Vroom’s wholesale gross profit per unit swung from $83 per unit in Q2 last year to a loss of $167 per unit in Q2 this year, which makes for a 301% decline.
So for all units combined – ecommerce, TDA, and wholesales – total gross profit per unit dropped 40% to $686.
And here’s how the pros did.
CarMax, the largest used-vehicle dealer in the US, has been through a few crises, and also got hit by everything that hit Vroom.
For its quarter ended May 31, the three months in the thick of the crisis, CarMax reported a 39% plunge in total revenues, being a brick-and-mortar operation with many of its stores impacted by lockdowns and a refusal by people to show up in person. But it still eked out a profit because it knows how to sell used cars and how to make money selling them even during a crisis – though it made less money per unit than during the Good Times:
- Retail gross profit per unit: $1,937 (-16.6%)
- Wholesale gross profit per unit: $978 (-6.2%)
- Total gross profit per unit, including F&I: $2,623 (-13.8%)
Those are the kinds of gross profits you’re supposed to make in the used car business during a crisis. Vroom, on its ecommerce platform, fell totally flat, with its total gross profit per unit of $686, compared to $2,623 at CarMax.
But even in the Good Times, in Q2 2019, when CarMax made a total gross profit of $3,310 per unit, Vroom only made only $1,150 per unit.
You see the problem?
Vroom, even during the Good Times, made only one-third of the gross profit per unit that CarMax made!
It boils down to this: These people at Vroom don’t know how to make money selling used cars. They’re just trying to buy the business.
This falls right back into the whole mania of money-losing companies that sell mundane consumer products or services – such as used cars or taxi and delivery services or lodging services – but are somehow considered tech companies that walk on water and can continue to lose money. And investors, those in the unicorn startup arena and those in the stock market, have been in love with them for years and have continued to shovel huge piles of money at them, despite their never-ending losses, in the hopes of somehow pumping up their valuations.
“We’re not even thinking about thinking about” slowing the decline of the dollar’s purchasing power — and thereby labor’s purchasing power. Read… Dollar’s Purchasing Power Drops to Lowest Ever. Inflation Heats Up, as Fed Wants, After Simultaneous Supply Shock & Demand Shock
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I envision the founders of Vroom blabbering on about how they are disrupting the used car industry.
They no doubt believe they are convinced that they brilliant (in spite of losing hundreds of millions of dollars).
In reality they’d have difficulty running a 711 franchise profitably.
Idiots.
WW,
I agree, but the real idiots are the investors. Follow the money.
Crazy sauce…
Maybe they think they are another Amazon in baby’s clothing.
I usually dont buy used cars but if I buy, I’d save $$ by buying from private party and getting it thoroughly inspected.
You can’t buy off-lease, young occasions from a private party aka real person.
The promise of e-commerce was the savings from not having B&M overhead. But today’s rent is digital, and the amount extracted by GOOG/FB/AMZN/APPL is getting pretty pricy, especially for Carvana and Vroom, I’d imagine. OTOH, I don’t think I’ve ever seen a targeted CarMax ad.
The advert for CarMax is the physical premises surrounded by the cars for sale; far bigger than any advertising hording imaginable; so why advertise when your potential customer passes by every day.
Vroom still has to store the vehicles someplace. They do have a large facility outside of Houston that was originally owned by Texas Direct.
And don’t forget deliver costs are extremely high for Vroom. They can’t just drop the vehicle off at FedEx and have them deliver, they need to have someone with a truck deliver the vehicle to your house.
Delivery costs is something CarMax does not have to worry about.
Exactly.
Three brilliant commenters above.
If Vroom came to you and said “Wolf, we want to hire you to show us how to sell cars more profitably and we’ll make you an offer you can’t refuse,” is there any possibility you could be convinced, or are you done for good working in the car business?
I’m done with retail and the car business. And I LOVE doing what I’m doing now — running my WOLF STREET media mogul empire — and life is too short to spend years doing what you don’t want to do, no matter what the pay. Also, I’m not the guy to do this; I’ve been out of this business for a long time. They can fix their issues once investors force them to by walking away from the company. But growing without plowing investor money into every car deal is harder than what they’re doing now.
Call me old fashioned but I *certainly* would not spend 25K on something sight unseen! If I believed in the pan-panic, I would don a full hazmat suit and stand physically in front of the item. Next uber-eats will be delivering used vehicles. The geniuses will be patting themselves on the back while slinging buzzwords like “synergy” around and madly IPO-ing their new “disruptive” hogwash.
The pizza and fryer smell does hide the new car smell
It closed at $69.01 before the bad news. When I googled the stock price it is amazing how many articles are bullish on it. If this does not shout dot com bubble nothing does.
You’re right. Nothing does.
There will be no more bubbles nor will there ever be a failed company in the US anymore. FED is the company store backed by nuclear weapons. We are the cleanest dirty shirt in “capitalism”.
Hey Fed, we need you badly. Our stock is down 20% today. More funds are required for buybacks, and cash flow to fool the public that we are actually a business and not some zombie shell company with a catchy name. Hurry! Please hurry.
Vroom Mis-management and Dullard Directors Committee.
So Wolf, your tip is to buy from Vroom vice the CarMax pros? Pity you did not directly compare the average selling price at CarMax with Vroom.
The average selling price is product of several factors, including the mix of vehicles they sell. So it’s hard to draw conclusions from comparing it to other dealers. But I looked at advertised prices yesterday… I didn’t really do any detailed comparisons, but Vroom looked like it had some deals.
Unlike a new car, upon inspection every used car can be considered unique. If it’s significantly below the averages, there’s often a reason.
I just buy from the guy on the corner who’s been there forever, even longer than us, stands behind every sale, provides service, and I can wave to or maybe have a chat when I walk past the lot. Bonus: if it’s a nice car he even likes to drive it himself for a while. He’s a grade A mechanic, fussy, and is meticulous about correcting anything that may need attention.
If I want to change cars I just let him know what I want, and wait for it or something similar. No rush – rushing is the weapon of choice for salesmen.
The current younger generation likes things in real time. They are willing to buy a lemon because they do not even know it. They will either go try to get if fixed or trade it in.
I know a co-worker was having issues with his 2 year old car he bought new. We found out that he must have had a small oil leak and ran the car till the engine would not start because of very little oil. Put new oil in the engine. It does not run the same….so he is trading it in. He knows it does run well but the next buyer probably won’t.
I think the general concept for consumers is to look for “disruptive” tech companies trying to get into an old stale market. In the recent years, it seems that we are all “benefiting” from subsidies via investors.
Uber, Lyft, Wayfair, (whatever that mattress company was). All investor subsidized to gain market share. Certain of these are now running into trouble other than financial, see Uber and Lyft in CA. But it’s the consumer that loses in this case and arguably the workers benefit, after all, without Uber and Lyft, people still has to go from point A to point B.
The point is to take advantage while it’s possible. Fed induced mania where investors continue to support the subsidy model can’t last forever.
Wonder why the piper will come calling.
I’ve bought cars sight unseen and had them delivered many times. But I did that only through private party sales. I talked to the owner extensively, got videos and pictures, Facetime, etc. I looked at maintenance history, I called mechanics/dealers that serviced the car and got a sense from them how well the car has been taken care of. And always had the car inspected by an independent 3rd party mechanic, who had never seen the car before and provided an unbiased report. There’s that old saying, you buy the seller not the car. When I scan car ads I look at pictures of the surroundings as much as a car. For example if the pics are from a gas station…pass, on principle alone, lol. If the pics are from an apartment complex….pass. Probably a 23 year old kid who has abused the hell out of it. If the pics of the car are inside a 4 car garage, surrounded by $75K cars…..then I’m interested. It means the seller is a car person, takes care of the cars and most importantly can afford to take care of the cars. Worst thing you want is someone who owns an expensive car and has no money to take care of it. Tires are another factor. If the car has Michelins, I know the owner cares. If the car has cheap Chinese junk tires, I know the owner doesn’t care and/or can’t afford the maintenance.
But buying a used car from an online place like Vroom? You have to be nuts to do so IMO. These care have no documentation. You have no idea who owned the car before. Best you may get is some scattered info from Carfax. You have no idea how it was taken care of. You can’t get an inspection ahead of time and there’s no way to get any details about the car from some call center rep 1000 miles away. You’re buying based on a few pictures. If you’re buying a $100 item, sure good enough. If you’re buying a $30K item….whole other story.
But that’s just me.
Just Some Random Guy,
I thought about using an online dealer when we bought our pre-Pandemic car, but didn’t. I also went to CarMax and drove a car we’d picked out from their website. It had a huge mechanical issue with the hybrid drive — glaringly apparent while driving it just down the street. So I walked and bought somewhere else. During the follow-up call that sales reps are forced to make, she said the company had pulled the vehicle and that it wasn’t for sale anymore, but she could bring in a different one from an out-of-state location….
Online dealers have a return policy that gives a certain number of days during which you can return the car and undo the deal. So that’s your insurance policy if something is wrong. But it sure is a lot of hassle to undo an entire deal – especially if it involves a trade and financing – a lot more hassle than walking away from a test drive.
Wolf,
With Carvana, you get 7 days from date of transaction but typically, the car arrives 2-3 days after that. Buyer beware.
Priced my car on Vroom last week. A few days later got another offer from them $500+ more than the original. Do they need cars or do they initially underprice and come back later like they did with me? Are there sophisticated AI programs to measure supply, demand … and price off that.
How do you decide when to get rid of your car and will used prices drop by October? Sorry to hit you up with so much. Oh, LeaseHackr has obscene/cheap Audi eTron leases on the west coast.
We got rid of our car because it was time. Bought new in 2006. But here is how it happened: we rented a car to go skiing (our personal car was a powerful rear-wheel driver, which is great except in snow, so we always rented a front-driver to go skiing). Just by chance, the rental agency gave us a Ford Fusion Hybrid. And that was a nice car with excellent fuel economy, felt really good to drive, relaxing. We both liked it and decided to buy one. And then it took a couple of months of dilly-dallying around and looking, before buying direct from the rental-car company.
Wolf,
Buy an Audi with snow tires. You will never think about snow again while driving.
I know someone who bought a car from Carvana. When he went to pick it up, it was the wrong car. He had a hard time convincing Carvana that it was not the right car. I have not followed but it was still longer than a week and he still did not have it resolved. Typical internet company. You get sold something but if it does not work right or is broken, good luck finding someone to talk too.
Do I get to test drive the vehicle before I buy?
Vroom does not offer a typical brick-and-mortar dealership test drive. We believe we offer something even better. From the day your vehicle is delivered, you get a full week (7 days or 250 miles) to know your car. Take it to work, check out the leg room, see if the kids’ car seats fit…make sure it’s right for you. If it’s not, we’ll take it back and refund the purchase price. Beats 15 minutes around the block at the dealership, right?
(copied from Vroom)
Needed: an app that let’s you kick the tires on- line.
Kind of funny most of their profit per unit is from finance and insurance.
A lousy driver can wreck the clutch in ten K miles or less. Seen it twice where they drove with their foot resting on the clutch. So a car can look great have low miles be almost new and be looking at a major repair.
Used? Don’t buy until you drive and/ or inspection by trusted party that YOU pay for.
It amazes me this outfit even exists.
Nick,
Vroom and the like are being built to be sold. Its simply a car distribution platform. What will be interesting to know is if GM or Ford could by a stake and sell new direct to consumer without breeching franchise laws.
Clutch? While a clutch myself, you old!
Lol.
I prefer manual transmissions. Less complex = typically less maintenance. Since transmission work is very expensive, avoiding it is preferred as is making it less expensive when it is needed… The newer cars with CVT I’m trying to avoid for similar reasons.
My truck just had a clutch replaced – after 180k miles.
I saw that Uber is threatening to leave CA because their courts are saying the drivers have to be employees instead of contractors (so costs to Uber will be completely noncompetitive). It will be interesting to see how this plays out.
The courts/regulators should get these questions answered more quickly. The old incumbent competitors bleed while this kind of legal drama plays out (years).
California is actually going to save Uber lots of money.
Uber lost $2.9 billion this past quarter. By closing down in California they will no doubt save millions.
Uber and Lyft both threatened that. There is a proposition on the ballot in November that would clarify that drivers are contractors, not employees. So Uber’s and Lyft’s threats were to “suspend” operations in California “until November.”
The thing now is that drivers received federal unemployment benefits under PUA (CARES Act), but Uber and Lyft never had to pay into the state unemployment insurance fund for those drivers, and saved a lot of money that way, at taxpayers’ expense. It’s also unfair to other companies that have to pay into the fund.
Really, so voters/consumers are going to engage in collective bargaining? In an industry many of them never use? Oh wait, so voters reject the issue and Uber/Lyft either capitulates or leaves the state? Why am I not easy with this.
Ambrose Bierce,
I haven’t read the text of the proposition, but I will do so very very carefully before I vote on it. My default vote on props is NO unless I understand what they say and do.
Uber and Lyft won’t leave the state. This is just a bluff. Once their legal avenues are closed, they’ll adjust their policies and their scheduling and other things, and they’re working on that already, I would think. It will just raise their costs by some amount. But since this applies to all rideshare companies in the state, they can likely pass those additional costs on to their customers.
And yes, they might lose some business to taxis or buses or the BART, but not a lot. People who are used to taking rideshares won’t stop just because the fare went up by $1.
Uber did leave China after all.
Uber/Lyft drivers didn’t need to be given this unemployment money by Congress. If it had not been given, many would have continued driving or found other jobs or used savings. The drivers that paid into unemployment as self-employed would have gotten benefits as well. They also had access to the other grants and loans as independent contractors. As a driver, I was surprised we were eligible for benefits because most of us didn’t pay in to it. But don’t blame the player! Blame the game.
Them working is the problem.
Somebody is LOLing right now about this stuff. We consumers on the other hand will finally lose our investor supported rides in CA.
Not that it matters right at the moment, because it is probably killing Uber/Lyft now with reduced number of rides. So, this couldn’t have come at a better time… for somebody. Since Uber is still subsidizing rides at the moment.
Just saw an analysis that Facebook, Amazon,Netflix, Google make up 0.5% of SP500 sales and 12.9% of maketcap. Let’s see how that looks in 10 years.
It is going to pop as a bubble eventually.
Another analysis might be profit share (ex: what percentage of profits do these companies represent)?
Plus, what rate of growth are they seeing their profits relative to the rest of the S&P 500 index?
“CarMax, the largest used-vehicle dealer in the US, has been through a few crises, and also got hit by everything that hit Vroom.”
Maybe, just maybe, there are some types of sales that can’t be done via the internet. I couldn’t imagine buying a used car (maybe a new car) remotely. I’d want to check out the condition of the interior (including using my nose), check the wear patterns on the tires, check the color of the transmission oil, hear the engine, and of course drive it. Unless the seller has an impeccable reputation for accepting returns, it seems too risky to me.
By the way, Wolf, I love the bits of humor you randomly sprinkle (“Vroom, being a tech company or something”) — makes your postings all the more enjoyable!
“I’d want to check out the condition of the interior (including using my nose), check the wear patterns on the tires, check the color of the transmission oil, hear the engine, and of course drive it.”
Find a reputable mechanic where the car is sold and have them go through all that for you. Go to a message board for that make, ie if you’re buying a BMW find a BMW message board and ask people there for a recommendation. They’ll gladly help out. Then call around and ask what does a PPI entail. Some will do a basic check, some will take 3 hours and go over every square centimeter of the car. $200-300 typically. And ask for pictures of any issues they find.
I’ve had PPIs that ranged everywhere from “buy this car, and if you don’t I will” to one where the mechanic called me and said he’s only spent 10 minutes under the car and wants me to run away as fast as I can.
Problem is with Vroom you can’t do any of that.
I think the largest problem right now is that all these “investors” assume that “disruption” is only a positive, and forget the fact that disruption means the elimination of a lot of jobs, which means the elimination of a lot of the money your customer base would be able to spend.
My Chevy Cobalt died on me in June. I went to the Carmax website, found a car with the miles & price I wanted, placed a hold on it and the next day drove test the car and bought it.
Carmax has a slick operation.
My son called me last night to try to get me to sign up to Robinhood and a similar competitor. If I understood him right when you sign up you get an unknown Dollar amount of an unknown stock. If I remember right it’s between $5 and $500. If he signs three people up again if I remember right he gets $100 of an unknown stock.
It’s funny that the same day I got a 30 page legal disclaimer from my credit union. One of the paragraphs was warning about the risks of linking third parties to your bank accounts. Anyway, I told him that the a few shares of a random company wasn’t worth the risk of a data breach.
The impacts of a twin demand/supply shock ended up being counter intuitive. On this forum we talked about the impending doom of rental car inventory dumping. Either it hasn’t hit yet, or it was easily absorbed already. I was sure there was going to be a glut of quality used cars to choose from by now. I was wrong.
New car assembly lines were also shut down, creating shortages in popular models. I assume many buyers switched to late model used cars.
Seeing all this recent data on credit, sales, inflation, etc. has been a huge learning experience.
In good news – some of Tesla’s daily gains are greater than Ford’s entire market cap.
The business model here is no different than Uber or Redfin? They are commoditizing and consolidating fragmented markets. Success is when you grow big enough to sell debt on Wall St. This might be the goal of Tesla, not to make cars but sell the power units and the software package to the body and fender companies. Ultimately somebody needs to franchise the car repair business. If you sell me a used car and a warranty, repairs at your local shop, then I am interested.
My friend’s son is a manager in the auto body repair business. It’s currently getting rolled up, but I think the big player is not a public company. It got crushed by the virus too as fewer cars on the road led to fewer accidents.
The auto body business had a hard time getting workers. He was supervising a program where they trained exmilitary people for free and gave them the tools to get started hoping to retain some of them. That program ended with the virus.
As always when I read news like this, I wonder what happened to anti-trust/anti-dumping laws. Wasn’t it at some point illegal to use your deep pockets to sell at a loss to acquire market share in a hope to gain a monopoly/disrupt existing markets?!
It is legal, but only for Amazon.
I made this point before, but I was always told by the crowd here that what Amazon did to bootstrap their business should be considered “long term investment”.
In America, it’s always your pocket books talking. One day Amazon becomes the de facto government and then the same people will throw Bezos under the bus, but by then it will be too late. People worry about Democrats and Republicans, but it’s the big 4 they should be worried about.
apm:
Don’t know about the current laws but in “my day” working for a major international grocery chain upon taking over a division purchasing management position we were required to sign a “consent decree” that put us in a liability position if breaking the “rules” of monopoly purchasing power because of our large volumes. I don’t understand how today’s businesses get away with what they do not only domestically but internationally. Of course the major ones are Amazon and other e-businesses that have crushed the competition because of size/metrics.
“You see where this is going: the more it sells, the more it loses, and this in the used-car business.”
Before the virus hit I was searching for a new to me car incessantly. In the northeast using cars.com and autotrader.com Vroom was always higher than what appeared the “average” price. I always thought it was possible that brought other value in some form but never investigated. Instead I always skip over their listings.
So in the end higher prices than others and losing money.
This is the Amazon effect- Amazon started as an online bookstore, just one of many I might add, and not even the best (I used to order from all sorts of other online bookstores).
I didn’t think much of buying Amazon stock when it came out – Amazon was just like ordering from catalogs except from a larger computerized menu where you could post customer reviews.
Then Amazon did this whole paradigm shift thing, expanded into data centers, shipping, video content, etc., and now look what it turned into. Very clever – it simply looked at every single part of its original core business – selling books, hosting customer reviews – and it decided it could branch out into other businesses based on what it did and used. It first branched into selling everything online, then built its own data centers to host all that data, then expanded into providing Cloud services for others, it built its own fulfillment centers, then its own delivery system, then bought Whole Paycheck to provide fresh food, and started its own online streaming and TV service.
Early on, Amazon never made a profit. It does now, but mostly uses it to keep growing
That’s the hope of every other startup, to be like Amazon. To start with a mundane core business and then branch out into everything. The vast majority won’t make it, of course, but the ones that do will change things forever, or, they will force the existing businesses to change forever.
The people buying these startup stocks? Just gambling with their money. Maybe one of them will be the one that grows over a 1000 or 10,000 fold
While one of the goals is turning into Amazon or being acquired for these companies, the driving force is making principles rich no matter what happens. There seems to be a quaint nostalgia that business success has something to do with actually being profitable these days. Should be clear at this point- not so much. More like an MMT lottery.
I have a cousin who did get rich working at a Silicon Valley startup. He’s now officially the most successful of the cousins in the extended family and is mostly retired and focused on figuring out how to live forever. He tried going back to work for another startup but by this time was a bit too old for that ever evolving culture and quit
We sold two cars, one to Vroom, one to Carvana. The vehicle we sold to Vroom for a very fair price, was a 1984 relic that no other used car dealer or dealership would touch. My husband had purchased it used from an old HS buddy. In my view, the car was a wreck. My 2016 Honda Civic (purchased new) went to Carvana. The car was in excellent condition and we sold it for $3000 more than Honda dealerships were offering and $1500 more than CarMax offered. Because of the peculiar topography of our street, we had to drive both vehicles to a Rite-Aid parking lot to get them picked up by the respective companies. They performed quick on-site inspections and hauled them away (this was after the preliminary online transmission of paperwork–registration, license, VIN, etc.). The experiences were unstressful and easy.
I sold my truck to Vroom this past February. The timing of it was a thing of beauty. Shortly after I sold it, they stopped buying vehicles unless it was involved in a purchase transaction.
They offered the highest purchase price of anyone…this article explains why.
Wolf,
You’re confused about Texas Direct. They were, for years, eBay’s largest vehicle seller, and their physical presence was a massively efficient recon and shipping operation.
And they had really excellent software to support the operation, long before Vroom, Carvana, and Shift emerged.
The acquisition was excellent, and Vroom will recover.
That said, a $314 gross on u/c is not sustainable :)
I don’t get Carvana or Vroom but I think of car buying like shopping, in and out, how can I do it fast.
You can get pre-approved online in a myriad of ways from the dealer or your bank. The dealer has more secondary lenders and captive so use them but no how credit works. Having a pre-approval from bank really kills there yield sale….
I know what I want and usually wrap up a deal in 1.5 hours after first arriving on lot with test drive……Wed., Thurs. during the afternoon….