This is less of a tech layoff story and more of an overlevered business with crashing asset values against very difficult short term liabilities and no ability to refinance in a rising interest rate market. The real question for normal people is if Carvana sells off a huge chunk of its inventory at fire-sale prices, does that accelerate the crash in used car prices? Is March of 2023 the right time to pick up that fun sports car since it'll be super affordable?
The concept is great. But the volatility in the used car market has been historically unprecedented, and there's no easy way for them to hedge this.<p>As an FYI, I sold a car this spring for 8% over what I paid for it 6 years prior, i.e. it was worth about 85% of orig price adjusted for inflation.
Today, edmunds appraises it for 45% of orig price adjusted for inflation.<p>That is an insane move on a durable asset.
I've purchased 2 vehicles through Carvana, and honestly the process was fantastic. I feel I got a fair deal on both vehicles, the quality was good, and everything as advertised. I did all the paperwork online and when I showed up to pick the car up was in and out in just a few minutes.<p>The only problem I had was that the delivery tower didn't work when I dropped the coin in both times. First time the car was for me and I didn't really care. The second time it was for my son I would have really liked their gimmick to work.
They've been shut down in Illinois twice and they're still in legal hot water. Blame interest rates and inventory yadda yadda but they've been moving fast and breaking things too long. Their VP is facing <i>50+</i> criminal charges in this state alone.<p><a href="https://jalopnik.com/carvanas-legal-counsel-ordered-to-appear-in-illinois-co-1849585120" rel="nofollow">https://jalopnik.com/carvanas-legal-counsel-ordered-to-appea...</a>
I find it interesting that Carvana's CEO is the son of DriveTime's CEO.<p><a href="https://www.forbes.com/sites/nathanvardi/2017/12/18/how-an-ex-con-became-a-billionaire-from-used-cars/" rel="nofollow">https://www.forbes.com/sites/nathanvardi/2017/12/18/how-an-e...</a><p>edit: space
Carvana is destined for acquisition or bankruptcy. They have WAY too much inventory that they overpaid for. Consumer demand has plummeted and new car supply is bouncing back (up 78% year over year). They have too much debt on their books to make the model work. Good thing the CEOs dad cashed out when he did.
All of the iBuyer like companies are going bankrupt. Turns out there just no way to cut costs enough to make a profit in these low margin, capital and asset intensive industries. The idea that Carvana, OpenDoor, Redfin, Zillow, etc. were ever going to achieve something like a monopoly over their respective industry was laughable at best. Doomed from the moment they opened the doors.