CarMax Reported, Shares Plunged Further. Shares of Online Used-Car Startups Vroom, Carvana, and Shift Already Collapsed

CarMax ran into resistance against ridiculous prices. The used-car startups face an existential crisis. Vroom shares collapsed 97%.

By Wolf Richter for WOLF STREET.

When it comes to publicly traded used vehicle dealers, CarMax is the adult in the room. Online-only used-vehicle IPOs and SPACs Carvana, Vroom, and Shift Technologies are losing money hand-over-fist and might never make any money selling used cars because they weren’t designed to be profitable. Their shares have totally collapsed in a spectacular demonstration of how Wall Street is systematically cleaning out stock jockeys that ended up with this stuff directly or indirectly.

But CarMax makes money. And yet its earnings report today caused its already beaten down shares to plunge nearly 10%, to $93.33, where they’d first been in 2019. They’re down 40% from the November high. The earnings report pointed at the problem that the industry itself created, while customers, befuddled by an inflationary mindset, went along with it: Ridiculous prices. But enough customers are suddenly resisting. Before we get to CarMax, let’s have a look at the three used vehicle dealers whose shares have totally collapsed.

Vroom [VRM] started trading following its enormously hyped IPO in June 2020. Its shares have now collapsed by 97% from the high in September 2020 and closed today at $2.08, another new all-time low (data via YCharts):

Shift Technologies [SFT] went public via merger with a SPAC in 2020. The deal was announced in June 2020 and completed in October that year. Its shares have collapsed by 87% from their highs on June 29, 2020, to $1.89 at the close today (data via YCharts):

Carvana [CVNA], the original online-only used-vehicle dealer, went public via IPO in April 2017, at an IPO price of $15 a share. The hype, despite the big and increasing losses every single year for the past six years, was such that it catapulted the shares higher and higher. In August 2021, shares topped out at $376. And that was it. The great spirit of the hype suddenly vanished. Today, they closed at $100.78, down 73% from the high, and back to February 2020 levels:

These charts are indictments of the shenanigans played on Wall Street, and laments about the befuddled stock jockeys that bought this stuff on a wing and a prayer, believing in FOMO, believing in BTFD, believing in YOLO, and believing in all the other memes, and believing the thick hype because they figured that this time it was different or because they didn’t figure at all and just bought.

But CarMax is an industry veteran. They know what they’re doing. They’ve been making big profits for many years in the same industry where Vroom, Carvana, and Shift are losing an arm and a leg.

CarMax said today in its earnings report that its used-vehicle retail sales, in terms of the number of vehicles sold, fell by 5.2% year-over-year in quarter ended on February 28, and fell by 6.5% on a comparable store basis.

But its average retail selling price spiked by 39.7%, or by $8,300 per vehicle. In other words, its customers that did buy paid on average $8,300 more for a vehicle than they did a year ago. That’s a gigantic price increase.

Thanks to these ridiculous price increases, its used vehicle dollar-revenues spiked by 32.6%, and total revenues by 48.8%.

But this cannot be maintained. Enough consumers have had it. And their resistance is already making a dent – and that’s what CarMax alluded to today.

Across the industry, the total number vehicles sold in March by dealers to retail customers dropped 15% year-over-year, according to Cox Automotive estimates. This came despite a big increase year-over-year in tax refunds in March.

But wait.. this was in March which isn’t even included in the CarMax earnings report today for the quarter ended February 28. The unit-sales decline in the industry in March will get picked up by CarMax in its next earnings report.

“We believe a number of macro factors weighed on our fourth quarter unit sales performance, including declining consumer confidence, the Omicron-fueled surge in COVID cases, vehicle affordability, and the lapping of stimulus benefits paid in the prior year period,” the company said. Note the term “vehicle affordability.”

And the shares [KMX] got hammered down further, and are down 40% from their peak in November 2021:

That term, “vehicle affordability” means that the industry went totally hog-wild jacking up prices, and that consumers played along for a while, paying whatever, befuddled as they had been by the inflationary mindset, and flush with the various stimulus and cash-out refi monies, left-over PPP loans, etc. that all made up part of the trillions of dollars that had been set in motion by the government and the Fed.

Now there aren’t enough of these types of befuddled buyers left, and there is price resistance, and used vehicle prices are coming down. This was picked up also by the used vehicle CPI today, which dropped 3.8% in March from February, after having ticked down 0.25% in the prior month. But the index was still up a ridiculous 35% year-over-year:

There is a problem lurking on these car lots now. As retail prices are shifting down because consumers have had it and they’re resisting those ridiculous prices, the inventory that was purchased at these ridiculous prices will squeeze per-unit gross profits. CarMax is profitable and has been around the block, and it won’t lead to an existential crisis.

But that cannot be said for Vroom, Carvana, and Shift because they already lost an arm and a leg every year, even during the best of times when the industry overall made the biggest profits ever. But now, they’re facing overpriced inventory, declining retail prices, surging operating costs, and price resistance among potential customers. In addition, just in the nick of time, the Fed is tightening financial conditions for the next few years, which will make it more difficult for money-losing companies to get funding.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  107 comments for “CarMax Reported, Shares Plunged Further. Shares of Online Used-Car Startups Vroom, Carvana, and Shift Already Collapsed

  1. andy says:

    I’m waiting for electric high-end BMW at half price.

    • Wolf Richter says:

      New or used :-]

      • SoCalBeachDude says:

        i8s are fully electric and their prices have dropped substantially, and you can get one for less than $70,000 typically. I’m not into ‘lectrics and they’re a really old notion going back to 1898 with their heyday in the 1912-1916 era with the Baker Electric which my old friend Gertrude kept into the 1980s and used to take down for lunch to the Beverly Hills Hotel. I prefer 740i E38 series which is what I drive.

      • andy says:

        1-2 years old like new :-)

        • Morty Mc Mort says:

          I bought the Flintstone mobile.. (Ragtop) off of Fred in ‘0009
          BC… Half a million “Day Walks” on the odometer at the time and it needed new footpads..
          I added a super “Yabbbbaaa Dabbba Doooo” kit in ‘00008
          Boy did that baby.. Move!!
          After my knee replacement..
          I sold it to my Nephew for 37 Rocks, and he turned around and has been using it as a “Run” about.. heh heh..
          Ever since..

      • Phoenix_Ikki says:

        Looks like a lot of dumb money is finally making its way to money heaven..

        To that I say good riddance and to all the retail lemmings chasing the hype, I say but that dip now..

        • cas127 says:

          NYC banks are the St. Peter of the Pearly Gates in “money heaven”.

          Or, as was said in “Casino”…”you put my money to sleep, you mother******, I put you to sleep!!”

          The “angels” of creative destruction, capital division.

          Where are the “anti-reputational” effects?

      • morty mc mort says:

        Dumb Money
        Intentionally (I think)
        Debt on the 5-9 year car loan
        Lets morons think in payments, not Cost.
        I have seen it (this mentality) Growing everywhere..
        Wolf knows the Car business..
        Mr so and so..
        For one salad and a coffee each day..
        You can have the vehicle you really want…

        • cas127 says:

          “think in payments, not cost”

          That is the core of the problem, and has been for a long time.

          But the lesser seen, newer side of the problem is securitization of these stupidly underwritten loan payment streams, which encourages poorly productive auto manufacturers to sell overpriced vehicles to hopeless, doomed “buyers” *while all the while offloading default risk to yield starved investor-savers.*

          Investors who would have never bought such garbage securities before, now – after 20 years of ZIRP – are conditioned to buy anything with yield, risk be damned.

          It is a delusional “virtual reality” financial ecosystem entirely underwritten by ZIRP…once ZIRP stops, even a little, that whole fictional financial world implodes.

    • SoCalBeachDude says:

      There are some you can look at on New prices are now around $100,000. Typically they have the designation ‘i’ as in i3, et al.

    • Duke says:

      I bought a car for $4800 and changed my mind and carvana came and picked it up and gave me $7000. Was a great user experience for me.

    • Marcus1 says:

      Remember the term “market adjustment” when this mess comes to an end and dealers are desperate to move inventory. I’ll be ready to negotiate with dealers with that new vocabulary term.

    • Dan Romig says:

      I would like to drive the BMW i4 M50. Lots of power and torque, plus all-wheel drive. Quicker than my ’16 M4 manual 6-speed, but much heavier also. The 4-door Grande Coupé M50 has a curb weight of 5,063 lbs.

      There’s a slight turbo lag on my car, which the M50 does not have. But as you get to highway speeds, the M50 fades in performance. The extra mass does make for a smooth ride when cruising, but it punishes you when you want to turn, slow down or speed up.

      BMW has gone with AC synchronous motors instead of rare earth magnets that other manufacturer use. They use brushes to supply DC battery current to feed the rotor’s copper lobes and create a magnetic field. This allows continuously alterable strength of the rotor’s magnetic field. Cool, eh?

      VintageVNvet will like this: the best man at my wedding & longtime ago bike racing teammate was the race engineer at Rahal Letterman Lanigan for their Porsche 911 and BMW M3 and BMW Z4 IMSA race series. When he was president of the U of MN Formula SAE program as a Mech E student in the late ’90s, the team built their chassis in my basement’s metal shop with my tube-coping machine tool and my TIG welder. Tube steel 4130 birdcage with carbon-fibre panels working together. Yeah, I am a motor head.

      But out of all the fast toys I have, my Bianchi is hands down my favorite!

      • Dan Romig says:

        I should add that on the morning of Saturday, 2 May 2020, I called my friend to ask his advice on buying my M4 from Penske’s Twin Cities dealership. “If you take care of it and don’t put too many miles on it, it’ll be worth more in a year or two.” A minute later, I was out the door with checkbook in hand.

        As Wolf Street readers know, my friend was correct in his advice.

      • TonyT says:

        Changing an AC synchronous motor’s field strength has been done for decades – it’s called field weakening; motor control chip companies such as TI support this in their software for their chips.

  2. SoCalBeachDude says: is another interesting web site for used cars, but most of the high end collectible cars are going through these days.

  3. Flea says:

    Sold them my 2010 camaro ss2 for 21,900$ thought I hit the lottery ,they listed it for 30k ,believe they got 28k but put on new tires

  4. Flea says:

    Free,free,free money is over ,now comes the hangover

  5. Ted says:

    I took my son in law to Carmax in March to sell his vehicle. It was a 2011 Chevy Suburban with 161,000 miles. He told them his daughter left the sunroof open in the rain and that it didn’t work. (Chevy quoted $1300. to repair). Car was in average condition and they gave him an offer of $8500. which he jumped at. He was very happy, surprised, I was stunned. I looked on the lot while we were waiting saw a nice 2017 mustang convertible I liked, $49,500. Insane. That’s a $25,27,000. car! Thanks to Wolf I understood what was going on but still.

  6. Depth Charge says:

    Never in my life have I seen so much rapacious greed on full display in all industries as I have the past year. I have a long memory, and as the dealers start calling me – which they will – I will remind each and every one of them how they behaved. I won’t ever be buying a new vehicle again unless it’s 30% off, or something spectacular.

    • andy says:

      I once bought brand new caddy half off MSRP, for $21K. With options it was at $46K. It was in the show room, so could not take test drive. Paid in full with credit card right there. Didn’t even plan buying. Drove it for 5 years or so. It was stick shift sporty version.

    • J says:

      Greed? Do you comprehend supply and demand? Do you believe dealers are jacking up prices? The price of the cars has gone up because of the limited supply relative to demand AND it will likely be this way until 2025 before it’s normal again. while dealers have lost 75% of their
      inventory to sell, their overhead was not reduced by 75% (electric bill, rent
      factor, water bill, property tax, etc were not reduced by 75%) yet you call it greed. Hmmmm

      • Wolf Richter says:


        “The price of the cars has gone up because of the limited supply relative to demand”

        We’re talking used cars here. There’s a shortage of NEW cars. But there was no shortage of supply of used cars. I’ve covered this many times, including a few days ago:

        • Steve Me says:

          I am not a dealer but I am involved in the private party vehicle advertising business and that’s how the opportunity for exceptional insight. I do not set or profit from variance in prices, but rather a neutral third party and I’m in a better position to assess this neutrally than anyone else in the country. Your assessment that there has not been a shortage of supply of used vehicles is juvenile and incorrect. You are using faulty logic that because dealer lots have remained somewhat full, supply was not short. That is incorrect. The traditional forces that triggered people to be selling their used vehicles were lacking, particularly the lack of new vehicles for sale. What Private party used vehicles were being hung onto, and those put on the market were more often being sold to government stimulated friends, neighbors, etc., thereby more often circumventing the traditional dealer system. Many of the people that have sold their used vehicles to dealers or otherwise over the past 2 years have only done so because of the high values since covid, and dealers only paid those prices because they knew they could turn around and sell it for more. This all began when stimulus money started landing in people’s accounts immediately following covid and they couldn’t wait to go blow it. This was a natural supply and demand issue in the sense that the lack of new vehicles caused people to turn to used vehicles, but it was hugely exacerbated by the government stimulus. In the end, your assessment that there is really no excuse for high used vehicle pricing because there was no shortage is wholeheartedly inaccurate. Dealers generally had much higher acquisition costs during this stretch, and not only have their bills not gone down, but imagine in the course of the great resignation how they have had to increase their labor costs to keep suckers willing to do the dirty work of selling cars.

          The real stupidity and evil lies in people’s laziness and being willing to succumb to the unprecedented appeal efforts of dealers in trying to buy their vehicle wholesale, or falling prey to the slick marketing behind the new breed of online only dealers, instead of selling it themselves for retail value. This is where most people give up the most money for no reason at all.

        • Wolf Richter says:

          Steve Me,

          I agree with quite a bit of what you say. But some stuff is just silly. So let me give you some tidbits:

          1. In a normal year, about 40 million used vehicles are sold by dealers and auction houses. This is many multiple times larger than private sales. You’re completely naive about the magnitude of this industry.

          2. the average listing price for a used vehicle is now over $27K. So this is a big ticket item. In this price category, private sales between two strangers are risky and complex for both parties.

          3. For most people, used vehicle purchases are discretionary — meaning they don’t have to buy one today. Most people can drive whatever they have for one, two, or three more years. They’re buying because they want to. Not because they have to. We know this is true because during the financial crisis, they stopped buying. The government came up with the cash for clunkers program that pulled an entire generation of perfectly good older vehicles off the market. And still volume didn’t recover for years.

          So that’s what supply means: given a certain rate of sales, do you have enough units in inventory? Supply varies with sales. Now sales are down because prices are too high. And so supply is plentiful.

          4. Despite all your yada-yada-yada, you don’t know anything about inventories. So let me give you some numbers: the chart below is new (red) and used (purple) vehicle inventories at dealers in millions of vehicles. You see that new vehicle inventory is desperately short, but there are plenty of used vehicles. My dealer friends — I spent part of my life running a big Ford store — all say the same thing: they’re out of new vehicles and they have plenty of used.

        • Russell says:

          That doesn’t mean there isn’t a shift in supply (more throughput). It is just balanced between the greed of the dealer and the individual who are both equally willing to sell – for the right price!

        • B says:

          I agree with J. Lack of new car inventory did push up demand for used cars. And dealers are paying more to buy these cars from consumers. If you look at gross profit per unit, it is consistent with 2-3 years ago. Is the individual who can sell their Toyota Tacoma to Carvana for more than they paid new greedy?

        • Dan Romig says:

          As my comment above regarding the timing of my used M4 purchase, it was right at the top of the spike in the Used Vehicle Inventory on Dealer’s Lots chart when everything fell into place. A bit of dumb luck yes, but also thanks to Wolf Street’s reports, it was clear to me that that was the time to go for it.

          Thank you Wolf!

        • Scott says:

          The reason why online car resale companies stocks are falling is because they don’t negotiate on price. This is especially true with carmax. I was interested in one of their vehicles but thought the price was tad bit to high and offered them a great fair price and got told ” We don’t negotiate prices because it isn’t fair to other customers “. Why would the other customer need to know anything about the price of a vehicle someone else is purchasing. So maybe Carmax and the rest should Stop being so strict on price and if a customer is interested in the vehicle try to negotiate a good price that is good for both parties.

        • Wolf Richter says:

          CarMax isn’t “failing.” Their no-haggle system works very well. It’s like buying something at a grocery store: you don’t negotiate the price of your case of beer either. You buy it or you don’t buy it. Some everywhere. Why do car dealers have to be different? You don’t negotiate the price of your Tesla either when you buy from Tesla. Same in a lot of places.

          Have fun with my book on this situation (warning: crude car-dealership humor):

        • Dan Romig says:

          One thing to add to Steve Me’s comment,

          In Minnesota, the vehicle sales tax is close to 8%. But when you buy a car at a dealer, and that dealer buys a car from you in the same transaction, the 8% taken by Minnesota is calculated on the difference between the two that the buyer pays — not the 8% of the new car price.

          So there may be a few dollars more to be gained by selling a vehicle by yourself on the open market, with the risk and complexity that Wolf states, plus the time and energy required to sell a car on the open market. But you need to get 8% more than the dealer will pay to come out equally.

          For a $50k new car & $25k trade in, you’d have to get $27k selling it yourself.

      • Depth Charge says:

        Yes, GREED to a level I’ve never seen. People gouging on everything from cars to rents to food to you name it. GREED. I always find it funny when people become offended. You haven’t, by chance, been GREEDY, have you?

        • drifterprof says:

          Greed thrives in a culture where people are groomed from infancy, by predatory large-scale capitalism, to live unwholesome existences.

          The three Buddhist poisons (aka unwholesome roots) are: Moha (delusion, confusion, ignorance), Raga (greed, sensual attachment), and Dvesha (aversion, hate).

          Highly competent (or lucky) people, living an unwholesome existence based on greed, profit by social instruments that rip off less capable people who are living unwholesome existences of delusion, greed, and/or hate.

          “It was every thus that man chooses his own poison.”

        • John says:

          Yes, I am offended. I am offended by your complete ignorance of economic thought.

        • Jay says:

          I lost s bet on the Duke Carolina game to a coworker, so I had to buy him a KitKat. Stupid me bought it from RaceTrac on the way into work. Regular sized was $1.79. That’s easily up 50% from a year ago. Absolutely CRAZY!

          The only thing I’ve seen, food wise, that hasn’t gone up in price are Costo Kirkland protein bars, 20 for $17.99. Fantastic deal.

          That’s what nearly $11T does to an economy.

        • Markus Aurelius says:

          When you sell your home, will you try to get “top dollar” for it?

          That’s greed

          When you sell or trade in your car, do you want “top dollar” for it?

          That’s greed

          When you buy something, do you want it for as little as you can pay?

          That’s greed.

          “Greed is Good”: Gordon Gekko.

        • Flea says:

          Read the Bible it tells consequences of greed

      • tom15 says:

        I can get it…sort of.

        Wolf, now show us a car inventory from the fed going back a couple of decades.

        We have been fortunate with our work vehicles that we did not have to make a purchase. A lot of the mom & pops I work with have not.
        They paid the high used price v.s. the even higher new price + availability of new.

        I can only speak from my little slice of the world. But there are a lot
        of us who will have to be making purchases.

        • Wolf Richter says:

          Showing vehicle inventory long-term in dollars is useless. All it shows is cost increases. That’s most of what you see. If someone is trying to impress you with that, they need to go back to school. Inventories are shown either in number of units or in days/months supply (number of units in inventory divided by number of sales).

      • JLD says:

        Call it greed, call it savvy, call it whatever you want. I’m in a similar industry and we’ve figured out that right now we can sell less volume at higher margins and that’s what we’re doing. When demand drops and supply increases prices will adjust accordingly.

      • Jake W says:

        i understand it. that doesn’t mean that if a dealer pays $31k for a car from the manufacturer, that it normally sells for $35k, that it has to sell it for $40k simply because there’s a shortage.

        no one forces them to charge extra.

      • Anthony A. says:

        I would imagine all these dealers, new and used cars, got enormous Federal PPP loans that were forgivable after the pandemic. I don’t feel sorry for these guys one bit.

      • Just a car guy says:

        Much of the price increases are due to vroom and carvana bidding against each other at the actions, looking to please wallstreet in units sold. Well, we can see the end result in both their prices as well as the used car prices…the bubble is bursting, vroom will go belly up for sure. I have done business with both and carvana is so much more civilized experience.

    • robert says:

      Greed only works when people buy. There’s a way to stop it – don’t buy.
      There is no greed – only stupid buyers.
      Or maybe greedy buyers who think they can sell for more later.

      • just-a-boy says:

        “There is no greed – only stupid buyers.
        Or maybe greedy buyers who think they can sell for more later.”

        Or maybe they found that they can sell their current 2 or 3 year old car for a lot more than they thought. But once they take that deal on the current car they own, they have to replace it. So off into the shark infested waters they go.

  7. Jon says:

    Demand destruction due to high prices and high payments.
    I guess the same story is coming to housing market as well over time.

  8. Den Baumgartner says:

    I bought my dream car XKE British Racing Green for $4,000 credit union cop just married. My poor WWIi Okinawa army vet Dad co/signed for. When I got the chance to live and work in Tokyo I jumped at it. The car sat on the lot deteriorating for months before it sold for $2,000 sticking Dad for the balance. Sold me off cars to this day 40 yers later taking trains. That car is probably in someone’s collection, restored and over $100,000.

  9. SocalJimObjects says:

    Buy high, sell low!!! Someone told me that’s the way to generational wealth!!!

    • COWG says:

      “ Buy high, sell low!!! Someone told me that’s the way to generational wealth!!!”


      You misquoted…

      It’s the way to “somebody else’s “ generational wealth…. :)

  10. Double D says:

    My wife & I bought a 2014 VW Passat TDI SEL last year with under 40k miles for around $17,000. Bought it at a Volvo dealership in Northern, CA. They put new brakes & tires on it. It was a 8 out of 10 on a condition scale. TheTDI’s were the diesel cars embroiled in the emissions scandal with the Federal Government. VW settled the case with the government & made the necessary repairs to get them back on the road. 40+mpg highway & a really sweet ride.

    In 2018 we bought a Nissan Titan XD pickup truck with only 137 miles on it for $30,000. We flew to the Chevy dealership in Spokane, WA from Norcal & drove it home. It was a trade in. The dealership just wanted it off their lot & didn’t know much about it, other than it was a really nice truck with all the options on it. I looked all over the U.S. for that truck & the best deal. It was another great buy.

    The moral of the story is there are always great deals in used vehicles to be had if you look long & hard enough.

  11. Kenny Logouts says:

    Reversion to the mean…

    Gonna be fun. Just like it was in 08/09.

    I remember buying my E85 Z4 in Jan 09 for about 3/5th the price they were a year earlier.

  12. Doug says:

    I was going to get the new ford maverick hybrid, msrp was 28k fully loaded.. The local ford dealer wanted almost 40…. uhhhhh no… what a joke

  13. John H. says:

    On the one hand:
    – Not much worse for corporate profits than competing against a “debtor in possession.”

    On the other hand:
    – Sounds like CarMax might have access to some inventory on the cheap (at least versus Feb. prices).

    Too dicey and inscrutable for me, but is there an opportunity there?

  14. unamused says:

    The problem with using the Greater Fool theory as a business model is that you eventually run out of fools.

    • unamused says:

      I really miss naked shorts. You have no idea.

    • phleep says:

      Worst case, we might split into hordes of bag-holders, motoring anxiously above freeway underpasses full of the dispossessed. It happened before (though pre-freeways). But in the 30s, the Fed had tons of potential liquidity and just sat on its hands, as the flashy firms evaporated. No car, flashy or otherwise, hit a bid for a LONG time. This time the Fed is primed for frenetic slush funding activity, but may suffer a margin call itself.

      Ask not for whom that margin call tolls, because it tolls for us all.

      Then again, maybe this is just a healthy blow-off of froth, and the happy motorists will fantasize onward.

  15. unamused says:

    This isn’t funny any more. The spreading adoption of deeply aberrant attitudes and behavior in every area, not just used cars, makes it extremely dangerous.

    • VintageVNvet says:

      IMHO, you absolutely ”NAILED IT” una:
      Seeing ”The spreading adoption of deeply aberrant attitudes and behavior in every area,…” these days is appalling to say the least and very dangerous to the ”social fabric” upon which everyone relies.
      No matter what your situation in life, there are now completely random attacks on WE the PEOPLE,,, completely without reference to any individual/personal quality that have got to stop or be stopped and ASAP for USA to continue to function AT ALL.
      While likely the deliberate intent of some folks who appear to be following almost exactly the procedures/practices put into print by some of the ( far out in left AND right fields) crazies of 50-90 years ago is apparently coming to fruition.
      So what’s it going to be?

    • drifterprof says:

      Unfortunately the sacred cow of diversity (extreme individualism) lacks sociocultural glue to keep people united. Humans tend to need norms, and when norms break down, aberrant attitudes and behavior occur. The chaotic principle of “anything goes” triggers need for stability through fascism .

      • unamused says:

        What is really going on is not a battle with what philosophers call akrasia, or weakness of the moral will – the struggle to live up to our moral ideals when doing so seems contrary to our self-interest. Rather, the battle is over what moral values society should embrace.

        The positive case for traditional liberal values – toleration, neutrality, equality, proportionality and freedom from arbitrary infringements of liberty – can no longer be made to a full third of the US population. That case is rejected out of hand in favor of illiberal values such as nationalism, white supremacy, ethnocentrism, male superiority, religious fundamentalism, homophobia and the liberty to take advantage of the weak.

        It’s not actually possible to sustain a viable society on the moral values of a famished barracuda, but a reading of these pages clearly shows that this is what the US has become.

        • drifterprof says:

          “the battle is over what moral values society should embrace”

          IMO you are way overestimating people’s ability to embrace values. For the first half of my life I thought along the same lines.

          But now I think values are largely organically grown in culture, not ethical choices people “should” correctly make given facts and rationality.

          And many of those liberal values, that sound so good in the abstract, have seriously negative implications when taken as dogma (e.g. diversity).

          Although, I do agree with almost all your views on pragmatic issues.

        • Augustus Frost says:

          You conveniently left off the intellectual bankruptcy of the current dominant Western belief system, Materialism.

          Under Materialism, there is no basis for any standard of conduct whatsoever and anyone should logically be able do whatever they please. There is no morality and no “right” or “wrong” since there are no absolutes and it’s completely arbitrary. Any claim to the contrary is simply someone’s personal preference.

          It also doesn’t matter whether society completely collapses since nothing ultimately matters.

          Good luck

        • unamused says:

          “IMO you are way overestimating people’s ability to embrace values.”

          Puh-leeze. People don’t need any ability to embrace values to make choices with moral implications and consequences. Arguing beside the point constitutes the ignoratio elenchi fallacy. Minus ten.

          “And many of those liberal values, that sound so good in the abstract, have seriously negative implications when taken as dogma”

          Fallacy of unobtainable perfection. Minus twenty.

          My comment is supported by the evidence. One sees rather a lot of it among numerous extremist politicians and the behavior of corporatists.

        • unamused says:

          “You conveniently left off the intellectual bankruptcy of the current dominant Western belief system, Materialism.”

          Would you prefer this statement to be discredited as an ignoratio elenchi fallacy or a Straw Man fallacy? Take your pick. I’m easy.

          I couldn’t agree that any majority subscribes to either Hobbesian amorality or social Darwinism, insofar as either would degrading or fatal to most people. That’s more for your overlords and overladies.

          “It also doesn’t matter whether society completely collapses since nothing ultimately matters.”

          If you’re going to embrace nihilism you’re going to miss out on all the fun we epicureans are having.

          I’m over my limit, so I’m going to wait for the rest of you to catch up.

        • Arthur says:

          Go outside and breathe some fresh air. You’ll feel better.

        • THRILLHOU says:

          Unamused: Thank you for your insight. A commenter on this site wrote a while back that, like the famished barracuda you mentioned, we live in a world completely optimized for and dominated by psychopaths. As Charlie Sheen’s character noted in the movie “Platoon”, “Somebody once wrote: ‘Hell is the impossibility of reason.’ That’s what this place feels like. Hell.”

          You feel it. I feel it. I would think most people do. This world is influenced, moved, and ruled by people completely unmoored from any sense of common good.

          We have been slowly boiling in this now roiling pot for so long that basic observations like yours are, as you noted, rejected out of hand by many. To expand on the Platoon themes, Sgt Barnes has become who we cheer for, who we look to for salvation in this monster’s playground, this Hell of psychopaths running free setting reason afire. As Sgt Barnes said, “I am reality”.

          Kudos to you for being Sgt Elias, for being a lone voice saying, this isn’t how it has to be.

  16. Crush the Peasants! says:

    But Carvana has those cool vending machine thingies.

    • Anthony A. says:

      I wonder what will become of those “vending machine thingies” once they are done loading them up with cars for sale? Maybe turn them into some kind of amusement park ride?

  17. Tim says:

    The last time I bought a brand new truck , it was a 1997 F250 Super Duty

    Innocent onlookers would swear that someone was being assaulted with all the arguing and cursing. I got it out the door for $27K cash

    Disclaimer: I sold new and used for 20 years but got out when the kids came in hiring their lazy friends into managers chairs and F&I offices

    That truck would be $80K today? Not in your wildest dreams. I will auction buy the shit out of the blue title wrecks and build whatever I need. Or —> wait until that floor plan payment comes due – these small stores that have overpaid for their inventory will fire sale them
    Greed is a problem in the car industry, but stupidity on the car buyers is their own fault. If you sign for a bad deal, I say its tuition for an education you need.

    • Anthony A. says:

      Some buyers never realize they got screwed on a car purchase. If the “payment” fits, all was good!

      • Depth Charge says:

        Now they’ve got a nifty little trick to smooth that over as well – roll your negative equity into your next overpriced debt anchor.

  18. MC says:

    I could tell about 1.5 years ago that there was an over abundance of supply in used luxury vehicles. Was shipping for a 16-18 lexus 450h and they were abundant at 28-32k where 32 was a fully loaded f-sport.

    Considering lexus/toyota is/was supposed to hold their resale value better than nearly all other brands, it made little sense they were 40% off in 2 years and 40k miles.

    Then the mysterious CHIP shortage was created to clear up the abundant newish used car market. One hell of a coincidence.

    • Hal says:

      Generally, anything with wheels on it is a depreciating asset, but Lexus/Toyota do retain value well comparatively.

      Just guessing here, but it could be the “h” model in particular with worse resale. Lexus or not, a more complicated used vehicle with a “not new” battery to consider *might* affect what people are willing to pay (???)

      • rick m says:

        I put the ’98 Taco prerunner in the backyard to keep potential buyers away. The carpenters on ladders at my neighbors saw it, came to make an offer. A guy who just bought a house up the street wants it for his son. Two former coworkers and my cousin too. It’s just a damn old japanese pickup. Not a comfortable vehicle for long trips. Not terribly fuel efficient,four cylinder 2.7l notwithstanding. I keep trucks that I can work on, it’s good that way. It’s going to be more difficult to find competent mechanics down the road.maybe simplicity is attractive to others too.

      • Hal says:

        I googled my own theory and it sounds like the depreciation is actually quite similar, so scratch that. Heckifiknow.

        • COWG says:

          “ Heckifiknow”

          Great name for a son….

          Right up there with “ Dammit”….


    • Nemo 300 BLK says:

      Those models are highly leased, which during normal times floods the market with 2-3-year-old vehicles suppressing prices.

  19. Old Ghost says:

    Wolf wrote: “These charts are indictments of the shenanigans played on Wall Street, and laments about the befuddled stock jockeys that bought this stuff on a wing and a prayer, believing in FOMO, believing in BTFD, believing in YOLO, and believing in all the other memes, and believing the thick hype because they figured that this time it was different or because they didn’t figure at all and just bought.”

    Reading all the comments here regarding autos, I am reminded of what the Italian economist Carlo Cipola wrote. As summed up on Wikipedia:

    “These are Cipolla’s five fundamental laws of stupidity:

    Always and inevitably, everyone underestimates the number of stupid individuals in circulation.

    The probability that a certain person (will) be stupid is independent of any other characteristic of that person.

    A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses.

    Non-stupid people always underestimate the damaging power of stupid individuals. In particular, non-stupid people constantly forget that at all times and places, and under any circumstances, to deal and/or associate with stupid people always turns out to be a costly mistake.

    A stupid person is the most dangerous type of person.

    Corollary: a stupid person is more dangerous than a pillager. “

    • El Katz says:

      Reminds me of the “de-motivation” poster I had in my office:

      “Never underestimate the power of stupid people in large groups”

    • Michael Gorback says:

      Nothing will ever be foolproof because fools are so clever.

    • 91B20 1stCav (AUS) says:

      to reprise the title of one of Tuchman’s excellent historical tomes, ‘The March of Folly’ moves ever forward…

      may we all find a better day.

  20. CanCan says:

    We have been cycling through various kinds of shortages, some of which appear to be artificial or intentional for a decade. Many kinds of generic medications including cancer drugs were part of this phenomena. Competitors can buy out each other and shut down factories and increase margins . When one country or corporation takes over product of certain drugs, then they can rule the price. The same is happening with other industries.

    Obviously many industries have learned to employ methods to increase their margins. Now semiconductors are now the new play. Perhaps the margins were squeezed too much or competitors have bought out each other. Most of these semiconductor chips are specialized so it does not make sense that one industry would effect the supply of the other industries other than memory chips. Also semiconductor factories do not need many employees. Most run semi automated, clean rooms where everybody wears body suits and masks, so I don’t see how covid can be the cause of labour shortages.

    Most likely were are seeing some other phenomena such as company buy outs and factory relocation or global production conflict and conflict of interest in production plans.

    The idea that one entity can take over certain product or sales or retail coverage over entire planet is part of the cause of this phenomena too. Integrated vertical production and sales removes competition.

    Imagine a time when companies own the mines, factories and sale channels of a given product with no competition. We are moving towards that.

  21. Morbaine says:

    I remember looking at Vroom and Shift about a year ago thinking about buying put options on them with the logic being, “If they can’t make money in the highest margin used car environment ever, they never will”. Unfortunately, I didn’t pull the trigger.

    Curious if TOST will be covered in a future article since it appears to qualify as a recent IPO that’s been slammed hard in the past year.

  22. Car makers are taking their cue from energy producers, they are not ramping up production to hit a moving demand target. There are too many automakers. Must be a big shakeout in the industry or somehow boutique manufacturers will find a way. Vinfast wants to set up in NC., something China doesn’t have and decentralized reglobalization looks like the model. Imagine the investment that will pour into Ukraine after the war.

    • Nathan Dumbrowski says:

      After Germany lost the war the rebuild effort was massive. Friend was talking and walking with me in Munich. He said if you didn’t make a fortune off the rebuilding of Germany you were a fool. So I imagine there will be a fortune as you said to be made on the reconstruction. Perhaps they will make it the flagship of the NATO HQ

  23. joe2 says:

    This is why I like Wolf and contribute (although I didn’t get another mug) – data data data.
    Someday Wolf will draw conclusions and tell us what is going to happen to civilization.

  24. Nemo 300 BLK says:

    “We believe a number of macro factors weighed on our fourth quarter unit sales performance, including declining consumer confidence, the Omicron-fueled surge in COVID cases”

    What a lame excuse when Omnicron was an extremely weak variant. Not to mention it doesn’t explain the other 18 months of crazy purchases during the previous variants which were stronger.

  25. Jeremy Wolff says:

    Just bought a new used car. Went to three dealerships and talked on phone to a fourth. First one added “certification fee of $1900” when it was time to discuss numbers. Second one added “vin etching fee of $2000.” Third one added “micro protection treatment for $1995.” Fourth one wanted “interior upgrade plan for $1900.” These were all cars found on First two dealers let me walk out when I wouldn’t pay the inflated price. Third one relented to the advertised price.

    Guess this is standard practice now? It seems like if one guy does it, they all do. I know Wolf reported used car profits are around $1500 (for just the car), so I am not sure if these companies are advertising them at cost and adding their profit when you walk in, or if they are trying to grab an extra $2000 on top of their advertised price. But the KBB trade in value of the car I bought is higher than what I paid (and car is in great shape, great carfax). So I am guessing they are advertising the cars at cost to get you to walk in the door.

    So this would support the idea that quantity is down. BTW, car price paid was $24,000.

  26. David W. Young says:

    Carmax pricing has generally been high for what you could pay thru AutoTrader or other seller-to-buyer venues online. People have the impression, partially true, that these vehicles have gone through an exhaustive and often expensive repair/rebuild process before the ride is put on the lot for you and me. However, like any business, as margins get pressured, esp. this minute when there are very expensive layers of vehicle inventory on Carmax lots, that the management will begin to cut corners on dollars put into any single vehicle before putting it up for sale.

    So, reality and impressions diverge, and while a used-vehicle 3-year secondary market warranty can run some $1200 to $1600 with the dealer making a 40% to 60% margin on same out the door, you would be better off finding a used ride from say AutoTrader, bringing you certified mechanic friend with you to the test drive ( certified, not certifiable!), and finding a solid 65kmi. after-market warranty than buying from even a solid company like Carmax right now and having buyer’s remorse as prices are 15% lower by June.

    The avoidance of the $3,000 to $5,000 overpayment to drive off the lot will cover lunch and dinner for the mechanic as well the extended warranty from an insurer like USAA. Carmax is a corporate machine, and margin shrink will only occur with them kicking and screaming to reduce price. They will not negotiate under their current rules of selling, but me thinks that is going to change as dealer financing inventory costs rise along with customer financing rates. An inventory that don’t move is a burning hole in any company’s pockets.

    Don’t overpay because you think the vehicle has been more thoroughly inspected and repaired by a seller. An experienced mechanic friend can save you thousands of dollars with about an hour’s work looking over the ride and test driving it. Be a tightwad and be proud to be one, because very tough times are a coming. The Bozo’s that have gotten us here work in Washington and in the Eccles building, same zipcode.

  27. BaronVonPickle says:

    CarMax bought my two year old Hyundai for 20% more than when I bought it new. I walked away thinking “caveat emptor”. I guess they know what they’re doing.

  28. Augustus Frost says:

    CarMax is another company with a terrible balance sheet. $18B in debt, 350%+ debt/ equity.

    It has a trailing P/E of 13 but so what? No dividend. Half of its 2021 earnings are non-operating, didn’t try to determine the source.

    Interest expense on this mountain of debt is low due to the bond mania. It may take years for it to increase noticeably but when it does, earnings are going to take a big hit.

  29. Angie says:

    I hope sales for carmax plummet to a 90% decrease. They left us on an open highway for 9 days to hitchhike! The catalytic converter was no good in a car that’s only 8 months old. How are their vehicles passing the emissions test???

  30. c smith says:

    “CarMax ran into resistance against ridiculous prices.”

    The only way ANY company could NOT run into this sort of resistance is if the Fed had continued to print money, and Treasury kept sending it to people. Both activities have stopped, and reality has returned. Enjoy.

  31. NaturalWays says:

    I’m so glad to get this car news. I need to replace my 2008 Nissan Altima, since it needs $4,000 in repairs. Those Toyota dealers want $3,000 to $4,000 above retail price. I understand that if they did not mark the new cars up above retail that people would just buy them and sell them used at a big profit, but it is the attitude of these people.

    They should be honest about the price online. I had a snotty sales person tell me that I had to have tinted windows, whether I wanted them or not. He did not say I had to pay for the package they add on to get the $3,000 more they want, but that I could not have the car I want at all. I have no plans to buy from that dealership ever.

    I just did an inventory search and found that several Toyota dealers actually have Camrys on the lot, and they are not listed as pre-sold, which they have been for almost a year now. I’m still sitting on the sidelines. I don’t want to feel like I’m being ripped off. I can wait.

  32. Isaac S. says:

    why was $KMX Profitability so bad during the biggest price boom ever? seems like margins were highly constrained (non-inflationary) by Mr. Market even if their inflationary ASPs were not.

    Profit Margin 3.92%
    Operating Margin (ttm) 5.30%

Comments are closed.