carvana blow up and used car prices

[searcher]

A year after bankruptcy concerns, Carvana is leaner and ready for its Wall Street redemption​

• Carvana over the last 18 months aggressively restructured its operations and debt amid bankruptcy concerns to pivot from growth to cost-cutting.
• The efforts thus far have been successful, propelling Carvana’s stock last year from less than $5 per share to more than $55 to begin 2024.
• CEO and Chairman Ernie Garcia III told CNBC in a rare, wide-ranging interview that much of the company’s cost-cutting is behind it.
• The company still has a daunting debt load, due later this decade.

PHOENIX – As layoffs and cost cuts roil Wall Street, from retail and shipping to tech and media, embattled online used car sales giant Carvana says its own restructuring is in the rear view.

Carvana over the last 18 months aggressively restructured its operations and debt amid bankruptcy concerns to pivot from growth to cost-cutting. They were crucial moves for the company and its largest shareholders, including CEO and Chairman Ernie Garcia III and his father, Ernie Garcia II. The two control 88% of Carvana through special voting shares.

More:

Carvana targets redemption after bankruptcy concerns, restructuring

 

[Voodoo]

They are still absolutely going down. The debt got larger. Their inventory is Vastly overpriced (and therefore overvalued on its balance sheet).

 

[Casey Jones]

I don't have analyses to support my conclusion; but I think they probably are NOT going down.

I don't know the debt load; but I can see the auto market. New cars are both unaffordable and undesirable, because of complexity which makes major repairs likely and expensive - exceeding the value of the car, or of the buyer's loan.

For the next decade, until the government gets its regulatory mess corrected, if it ever does...until then, USED is the way to go.

And a nationwide used-car retailer has advantages. It can move inventory easier - as part of its structure. Rust has always been the bugaboo in buying a used car. Southwestern used cars don't rust.

Used luxury cars appear in some areas more-frequently...Florida, say; God's Waiting Room. There would be a greater market for gently-used luxury cars far away.

In-house financing would be able to get past banks' reluctance to loan long notes on older used cars - knowing, say, that some Toyota models, 15 years old, are sometimes sound enough, and valued enough, to arrange financing using the car as collateral.

It all depends on the debt structure. Those stupid car elevators were a gimmick - an expensive waste of money. Building the business with a structure that minimizes debt risk and cost, could lead to a growth business...perhaps even expanding into other nations, as American former-middle-class subjects, need cars, cannot afford new American cars, and see American used-cars' prices explode.

Importing 25-year-old cars that do not comply with regulations, is still legal, I believe. Bringing cars from Mexico, made by Toyota or Nissan (or even VW!) will be simple and sometimes sturdy...not a bad buy for someone trying to get to work in the New Normal.

 

[Voodoo]

You can buy a Used car all over the damn place. Why would you buy from CVNA at 20-30% higher prices?

 

[Casey Jones]

You can buy a Used car all over the damn place. Why would you buy from CVNA at 20-30% higher prices?

Don't know their prices - never bought from them.

But I understand why a chain. After being screwed by private owners, slimy lots, and even new-car dealers' used-car sections...AND seeing, in various parts of the country, the problems the weather, and buyers' preferences, make in terms of body rot, model selection, etc...there is a need to move used product from one region to another.

I bought at CarMax. It was not a bargain; but it wasn't grossly overpriced. I wanted a Toyota, and preferred an older model. There were none in good shape in my market, so I wound up going two states away, where the CarMax lot there had a likely candidate.

 

[searcher]

Police Seize Stolen Car Man Bought From Carvana​

Feb 14, 2024

It happened in FL and Carvana says they will take care of it.


12:55

 

[Voodoo]

Sure they will. I guess that is one way to make money, sell stolen cars. I'd stay farther away from them than Gainsville Coins.

 

[Casey Jones]

Sure they will. I guess that is one way to make money, sell stolen cars. I'd stay farther away from them than Gainsville Coins.

My take, reading some stories of Vroom's collapse and Carvana's problems...my take is, it's untrained staff, not necessarily criminal intent.

Buyers in some states have not gotten titles, long after the car is delivered. They'll get you a temporary tag. Then another. In states that have limits, they'll get a third in another state.

It's that all 50 states have different requirements for sales and titling. And those change all the time. Some states require notarization of all signatures; some do not. Some states allow dealers to skip titling - the title the seller delivered, can be reassigned to the buyer with a note on the bottom, done by a licensed dealer.

And some do not.

Some states have ridiculously short periods after which a used car requires no title. Some do not, and if a title is lost, it can NOT be replaced with a bonded quit-claim title. In Ohio, some people have had to junk good used cars because the title was lost or the transfer was not acceptable to the DMV.

So...Carvana's 22-year-old University-of-Phoenix grads, just aren't brought up to speed, and probably don't have manuals to guide them and walk them through how they can do it from their office location to another state's DMV.

 

[pmbug]

Seasonally adjusted, prices of used vehicles that were sold at auctions across the US fell 2.3% in April from March, to $18,151, the lowest since April 2021, and down by $5,423 (-23%) from the peak in January 2022, according to today’s Used Vehicle Value Index by Manheim, the largest auto auction house in the US. The index is adjusted for changes in mix and mileage.
...

...
Despite retail sales that are up year-over-year. These price declines occurred even as retail sales of used vehicles in April were up 9% year-over-year, according to Cox Automotive, which owns Manheim.

And despite declining inventories. Used retail inventory dipped to 2.22 million vehicles on dealer lots at the beginning of April, according to the latest estimates from Cox Automotive, compared to a range of 2.8-3.0 million in 2019.

This inventory trend – inventories are adequate, but barely, and they’ve declined for months – sheds an interesting light on the historic plunge in prices. It’s not a supply glut that is driving down prices in this historic manner; ...

Used Car Prices Continue Historic Plunge, Wholesale Prices Gave up 59% of Crazy Pandemic Spike | Wolf Street

That's a weird dynamic for falling prices.

 

[SilverSamurai]

Traveling highways
The wind blowing though your hair
Expensive today