'The Firm That Bought My Car For More Than I Paid New Has Lost 98% of Its Value' (theverge.com) 113
Carvana, the used car dealer that trusts robotic algorithms to buy your car practically sight unseen, was the third-fastest company to ever make it onto the Fortune 500 -- only Amazon and Google did it faster. But for the third day in a row, its stock is trading for just around $7 a share, plummeting 98 percent from its all-time high of over $360 last August. From a report: My first thought on reading the news: maybe the company shouldn't let robots pay people more than their cars cost brand-new? This February, I sold a seven-year-old car to Carvana for more than I paid out the door and wrote a story about the perfect storm of factors that led to that outcome. (Stimulus checks! Chip shortages! Covid fears! Unheard-of demand for vehicles! Blind trust in algorithms!) But after reading through the past six quarters of the company's financial results and shareholder letters, it seems much simpler than algorithms running amok. Carvana's humans bet badly by buying too many cars. Throughout 2021, as Carvana saw its first and only quarterly profit, the company kept telling investors how it planned to scale up production (read: get more used cars ready to sell) to meet the pandemic's unprecedented demand.
The stimulus checks paid rent and bought food (Score:5, Insightful)
Carvana's problem is interest rates and used car prices. Used Car Prices had already gotten more than most could afford and interest rate hikes wrecked what's left.
We're going to have a transportation crisis in this country, where people can't afford vehicles but our entire civilization is built around them being able to do that. And the car companies will be damned if they'll let public transport happen. Elon Musk basically spend a billion dollars on a scam that was discredited in the 1920s just to keep California from putting in high speed rail. When you've got that kind of money causally tossed around to stop something it doesn't have a chance.
Re:The stimulus checks paid rent and bought food (Score:5, Insightful)
California was failing horribly at high speed rail even without Musk.
Re:The stimulus checks paid rent and bought food (Score:4, Informative)
Automotive companies have spent the last 50 or 70 years making damned sure that you have to buy their product to be a functioning member of society. Nice work if you can get it but have fun dying of smog inhalation related medical issues in your mid 60s. Never mind the effects of climate change
It's called externalized costs. As a business you pass the cost of your product not just onto your consumers but on to all of society as a whole like externalizing them.
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Blocking it?
https://www.constructiondive.c... [constructiondive.com]
Cali just can't get it done on schedule or on budget. The price keeps going up and completion dates keep getting pushed out.
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We're going to have a transportation crisis in this country, where people can't afford vehicles but our entire civilization is built around them being able to do that.
I bet that with today's technology, somebody could put together a BEV with 150 miles of range, required safety features, ho-hum performance, but with bare-bones amenities comparable to those of a 1953 Plymouth, for $15,000 or less. That would allow almost anyone to commute around in our exclusively car-oriented country.
The problem is, nobody seems to want to buy such a vehicle, so they're not on the market.
BTW, high-speed rail competes against mainly airplanes, not cars. However, for long road trips, the po
Re:The stimulus checks paid rent and bought food (Score:5, Informative)
We're going to have a transportation crisis in this country, where people can't afford vehicles but our entire civilization is built around them being able to do that.
I bet that with today's technology, somebody could put together a BEV with 150 miles of range, required safety features, ho-hum performance, but with bare-bones amenities comparable to those of a 1953 Plymouth, for $15,000 or less. That would allow almost anyone to commute around in our exclusively car-oriented country.
The problem is, nobody seems to want to buy such a vehicle, so they're not on the market.
BTW, high-speed rail competes against mainly airplanes, not cars. However, for long road trips, the poor people without good EV range or fast charging could still use Greyhound for that, which is probably preferable to their other option, Spirit Airlines.
The 2022 Nissan Leaf has a 150 mile range and is the cheapest EV on the market at $27k. With the government subsidizing your new toy it comes to under $20k.
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Re:The stimulus checks paid rent and bought food (Score:4, Insightful)
Don't move the goalposts. The GP post was talking about a cheap EV commuter, and the Leaf is exactly that.
"But I can't drive from Chicago to New York without recharging?!"
That was not part of the original ask.
Re:The stimulus checks paid rent and bought food (Score:4, Interesting)
Nothing says "fun long road trip" like a 150 mile range and a long recharge every 2 hours.
There are millions and millions of Americans in a house with two gas cars in the driveway. They could switch one of those cars for an EV and save the other car for those long roadtrips.
...and as for the roadtrips here's the thing I don't get: People would honestly rather pay thousands per year in gasoline than add a few hours to the roadtrip to Grandma's twice a year? Is their time really worth a $1000 per hour?
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Electricity isn't free for most of us. I do have a coworker that has a plug in hybrid and he's found a handful of free ones and plans his entire day around uses them so he doesn't have to pay to move the car around.
He'll put gas in every so often but only really uses the gas engine for a couple miles a day just to use the engine.
What he is doing works for only a few people because free charging resources are scant at best. He's found one near our work and one near his home but if more then 3 people ever dec
Re:The stimulus checks paid rent and bought food (Score:4, Insightful)
Nothing says "fun long road trip" like a 150 mile range and a long recharge every 2 hours.
There are millions and millions of Americans in a house with two gas cars in the driveway. They could switch one of those cars for an EV and save the other car for those long roadtrips. ...and as for the road trips here's the thing I don't get: People would honestly rather pay thousands per year in gasoline than add a few hours to the roadtrip to Grandma's twice a year? Is their time really worth a $1000 per hour?
Thousands/year in gasoline is a lot of gasoline. Instead of a Nissan Leaf you could get a Nissan Versa, starting MSRP is $15.5k.
It is rated at 32 mpg city, 40 highway, average 36 mpg. If gas is $5/gallon (national average today is $3.794 for regular) they can go 7200 miles on $1000 of gas.
In many cases when you pay a premium for an EV you are essentially pre-paying for the fuel. The breakeven point is a function of how much the difference was, the cost of fuel, and how much driving you do. If you don't drive much you may never break even.
Re: The stimulus checks paid rent and bought food (Score:2)
Or buy a used Insight for 2800 like I did.
Aluminum car that cant rust. Even the frame is aluminum. 3 cylinder gas engine, manual transmission, 55mpg average over the last 181,000 miles. I can easily hyper mile up into the 70-90mlg range on pure gasoline. I disabled the failing hybrid battery years ago.
I get about 800miles to a tank that only holds 10 gallons. Recharge instantly at any gas station in the country.
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Or buy a used Insight for 2800 like I did.
Aluminum car that cant rust. Even the frame is aluminum. 3 cylinder gas engine, manual transmission, 55mpg average over the last 181,000 miles. I can easily hyper mile up into the 70-90mlg range on pure gasoline. I disabled the failing hybrid battery years ago.
I get about 800miles to a tank that only holds 10 gallons. Recharge instantly at any gas station in the country.
That's a very neat little car
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Or buy a used Insight for 2800 like I did.
Aluminum car that cant rust. Even the frame is aluminum. 3 cylinder gas engine, manual transmission, 55mpg average over the last 181,000 miles. I can easily hyper mile up into the 70-90mlg range on pure gasoline. I disabled the failing hybrid battery years ago.
I get about 800miles to a tank that only holds 10 gallons. Recharge instantly at any gas station in the country.
I just realized my motorcycle has a bigger engine with more horsepower and torque than a Honda Insight. LOL.
But the Insight is way more useful
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Nothing says "fun long road trip" like a 150 mile range and a long recharge every 2 hours.
There are millions and millions of Americans in a house with two gas cars in the driveway. They could switch one of those cars for an EV and save the other car for those long roadtrips. ...and as for the roadtrips here's the thing I don't get: People would honestly rather pay thousands per year in gasoline than add a few hours to the roadtrip to Grandma's twice a year? Is their time really worth a $1000 per hour?
It's a similar situation with people who drive a truck because they tow a boat or a trailer once a year. If you only need it once a year, you're probably better to just rent it.
Then again, whenever I see giant SUVs idling in a carpark, just so the passenger doesn't have to take 5 minutes out of the air conditioning, I know that fuel is still too cheap. If we had to pay the true cost of fuel and road maintenance, driving would be MUCH more expensive. And yes, I live in a mild climate. Usual daytime temperat
Re: fuel is still too cheap (Score:1)
yup...last time gas was expensive ppl actually drove@ speed limit. now if u try to drive so slow u get a grill in ur rearview:-/
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I will say it makes much more sense to have a hybrid if you're going to idle while parked regularly, though. With one of those, leaving the A/C on at a standstill actually uses very little gas as the engine only runs intermittently.
--
We will soon have the option to harvest our farts, so we can post
Re: are people really that stupid? (Score:1)
yes
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I would take Spirit long before a greyhound bus. Equally uncomfortable, but 10x less travel time where I have to deal with "other people" and direct line travel.
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I think the problem is $15,000 is still a hell of a lot of money to most Americans.
I doubt that. $15K ain't what it used to be. The current US median family income is somewhere in the $70K range, so more than half of US families could buy one of these free and clear with just a few months wages. People with less money can lease or buy on credit.
And if you're not one of the Americans the $15,000 is a lot of money for spending an extra 7 Grand so that your not killing your back and legs scrunched up in a mini car is worth it.
That's why I was comparing it to a cheap US car from the 1950s. They weren't particularly small, just bare bones.
Of course, you might also consider lack of a 32-inch curved OLED display, 18-speaker Bang and Olufsen sound system, power seats, two do
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Yes that's true about the median. However it also hides the fact that an increasing number of Americans are falling behind and living in poverty and definitely cannot afford $15k easily. They can barely pay for food and shelter. I know plenty of families struggling to meet basic needs. They don't buy new TVs. They barely afford food and rent and some gas for their car. They can't afford to replace the car they have with anything, gas or electric. Gas prices are starting to squeeze them, and they hope a
Re: The stimulus checks paid rent and bought food (Score:1)
I make $120k/y, I consider $15k to be acceptable. But not much more than that, thatâ(TM)s a $300/month payment. When I made $25k or $50k, $300/month was too expensive.
Most cars for low income earners are purchased used.
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spending an extra 7 Grand so that your not killing your back and legs scrunched up in a mini car is worth it.
I have a 34 inch inseam and have had no issue driving cars such as a Geo Prizm, Mini, or Ford Fiesta, so I don't think that's the problem you're portraying.
Re:The stimulus checks paid rent and bought food (Score:4, Interesting)
I bet that with today's technology, somebody could put together a BEV with 150 miles of range, required safety features, ho-hum performance, but with bare-bones amenities comparable to those of a 1953 Plymouth, for $15,000 or less.
Hi, I'm the Nissan Leaf. Apparently we've never met. I currently cost $28k with a range of 150 mi. Could you let me know what I could remove that costs $13k? Thanks.
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The Chinese:
https://technode.com/2022/09/2... [technode.com]
Re:The stimulus checks paid rent and bought food (Score:4, Funny)
Two Seater
Top speed: 62.5 MPH
0-30 (NOT 60): 8 seconds, probably because the motor is only 40 HP.
Chances that this would be even close to meeting US safety requirements: Zero-Point-Zero percent.
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Picky, picky, picky
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I bet that with today's technology, somebody could put together a BEV with 150 miles of range, required safety features, ho-hum performance, but with bare-bones amenities comparable to those of a 1953 Plymouth, for $15,000 or less.
Hi, I'm the Nissan Leaf. Apparently we've never met. I currently cost $28k with a range of 150 mi. Could you let me know what I could remove that costs $13k? Thanks.
I'm going to guess the battery, but I think removing that might affect your range -- even with being significantly lighter. :-)
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Instead of including Lithium power cells, just put in a few thousand D-cell battery slots. And make sure your sales lot is right next to a Costco.
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https://iplayerhd.com/player/v... [iplayerhd.com]
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Oh, that was brilliant!
Re: The stimulus checks paid rent and bought food (Score:2)
Mod up!
Re: The stimulus checks paid rent and bought food (Score:2)
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Re: The stimulus checks paid rent and bought food (Score:1)
With heavy subsidies from the government. Without it, the unit is expected to cost $28k, and itâ(TM)s a death trap.
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Charging infrastructure is the problem. People who buy that kind of car tend to live in an apartment or have roommates (or both). They mostly don't have a dedicated place to park and charge their cars. That makes them unusable. Especially with a 150 mile range, they may need to be charged every night.
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I bet that with today's technology, somebody could put together a BEV with 150 miles of range, required safety features, ho-hum performance, but with bare-bones amenities comparable to those of a 1953 Plymouth, for $15,000 or less.
The problem is not technology but the willingness of companies to produce a low-margin product that produces profits only based on volume. That is a losing formula for corporations driven by stock price appreciation. The technology exists. The consumer appetite likely exists. The supply likely won't exist for a long time. The only way toward the low-price goal is through the traditional disruptive technologies pathway of low-cost, low-quality suppliers working their way up the price ladder, a la the Ja
Re:The stimulus checks paid rent and bought food (Score:4, Insightful)
Re:The stimulus checks paid rent and bought food (Score:4, Interesting)
High speed rail in Europe works well, partially because the train stations are actually in the center of the city where you probably want to be when getting off the train. Everyone seems to forget that airports are built miles away from the actual city centers, because you need multiple 11,000 feet of runway and low-height buildings around them in every direction.
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If, instead of thinking about the entire US, you think about individual states and journeys between neighbouring states, then high speed rail makes a lot more sense.
Almost nobody is going to take a train from LA to New York - basically it will be the same sort of people who take the train from London to Hong Kong. But lots of people would take a train from LA to San Francisco or Las Vegas if it was actually high speed (200mph, not 75mph), and there was a train at least every hour, not every day.
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If you look at the busiest air route in the USA, Chicago-NYC, the 710 mile train takes about 21 hours which is obviously not at all competitive. In China, the 819 miles from Beijing to Shanghai takes a little over 4 hours. By the time you add the airport commute at each end and required check-in time, it's about a wash.
Priorities. It's all about priorities.
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That would not be my number 1 priority for high speed rail. Things like the Texas Triangle, California High Speed Rail, the East Coast corridor between Boston and Washington DC, Portland - Seattle - Vancouver, Detroit - Fake London - Toronto - Ottawa - Montreal - Québec City; those would by my priorities. For the latter, probably very few people would take the full route from end to end, but travel between intermediate stations would be well used.
Having said that, if the travel time is about the same,
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More densely populated countries? Ignoring microstates, the only European countries which are more densely populated than California are Malta, the Netherlands, Belgium, and the UK. (And Luxembourg is only slightly behind California). And California isn't even in the top ten most densely populated US states.
Re: The stimulus checks paid rent and bought food (Score:2)
Cheap cars just dont sell well in usa. People are too rich to think they should buy a 20k car and live with it. Even the people who are poor think that a mirage is not a car or that a 320 bmw doesn't exist - it turns out beggars can be choosers.
Re:The stimulus checks paid rent and bought food (Score:5, Insightful)
I'm sorry, I thought this was common sense knowledge by now.
America is in debt. Deeply in debt. At least most of it. Any money you pump into these people will be used to stay afloat and evaporate.
People already did overspend. That ship has sailed. Pumping money into people hoping that they'll spend it would have worked about a decade ago. No, it's more like 15 years ago by now. Beople are FUCKING BROKE.
The consumer already did more than it could. Now the economy is shot because we didn't learn that an economy doesn't just need to produce cheaply, it also needs someone to sell it to. And that someone needs to have enough money to consume. Without consumption, the system breaks down.
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Trade deficit to GDP is measly 3%, so while US consumers are in debt the US as a whole can pay its way just fine.
Pumping money into people can work economically, it just can't work politically. You'd have to throw billionaires from the helicopters together with their billions.
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You say like throwing billionaires from helicopters was unpopular with the voters.
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>America is in debt. Deeply in debt.
I agree that this is a big problem, especially if the world moves away from the dollar for international trade
>Any money you pump into these people will be used to stay afloat and evaporate.
For some people yes, for some no.
>Beople are FUCKING BROKE.
This could especially hit people retiring in the future, especially if the government cuts social secur
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He's not talking about government debt.
You're talking to the local village idiot here. rsilvergun doesn't actually read the stuff he responds to, he just looks for something vaguely related to whatever screed he's got on tap to post right now.
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The Republicans use this excuse to cut benefits (housing, food, health) from poor people.
Of course, they're not averse to enacting tax cuts for rich people... they don't worry about the debt there.
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Most Americans can only wish that they were a mere 20K in debt and had a 6-figure salary... the reality for the average person is far worse. For every person who was able to take their stimulus check
Re:The stimulus checks paid rent and bought food (Score:5, Informative)
We're going to have a transportation crisis in this country, where people can't afford vehicles but our entire civilization is built around them being able to do that. And the car companies will be damned if they'll let public transport happen. Elon Musk basically spend a billion dollars on a scam that was discredited in the 1920s just to keep California from putting in high speed rail. When you've got that kind of money causally tossed around to stop something it doesn't have a chance.
How would high or low speed rail eliminate the need for cars? I have the Acela line near me, it's fine if you want to go from Washington to Boston, but that's pretty much it. The round trip per person cost is very high and doesn't scale for a family. And if you need to get to the source or destination stations from the surrounding area you still need connecting transportation, like a car. For me to visit my sister using Amtrack I need to travel 30 minutes to the station, catch a two hour train ride to Baltimore, and I still need a one hour ride to get to her place. The lowest non-Acela train ticket round trip price for this is around $190.
Looking on Craig's List I see plenty of "for sale by owner" used cars under $8000 that I'm sure can run for many years and miles. People will manage unless our overlords ban ICE used car sales or gas sale or whatever else they can dream up to make life harder than it needs to be.
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Exactly - the desire to see defunding of Amtrak is almost enough to make me throw my hat in the ring for congress.
its the single stupidest thing we subsidize and its literally ONLY useful to handful of left cost elite who can most afford alternative transportation.
Shut that shit down!
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How would high or low speed rail eliminate the need for cars?
By proving an alternative way to get to places without using a car. Are you some kind of alien that hasn't seen how a rail network works [youtube.com]?
You're basically saying "the pathetic bare-minimum rail that exists right now doesn't work, how would improving it change anything".
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How would high or low speed rail eliminate the need for cars?
By proving an alternative way to get to places without using a car. Are you some kind of alien that hasn't seen how a rail network works [youtube.com]?
You're basically saying "the pathetic bare-minimum rail that exists right now doesn't work, how would improving it change anything".
You left out the rest of my comment, for obvious reasons. Rail gets you from a rail station to another rail station, at a high per person cost per trip.
It doesn't scale well when there are multiple travelers. It doesn't get you to and from the rail stations to your actual source and destination.
I've commuted by rail to NYC for decades, it's very good for a city commuter. You still need a car to get to the station.
Rail is useless to get your kids to the soccer field, to go to Home Depot, and so on and so
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I let out the rest of the comment because it continues the rest of the nonsense premise that somehow rail doesn't work as transportation.
You need a car to get to a train station because you probably live in some suburban hellscape with zero light rail (or any other) infrastructure. I can walk five minutes to a subway station or catch a tram to a nearest train station. Because those are a thing that are part of transport infrastructure.
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I let out the rest of the comment because it continues the rest of the nonsense premise that somehow rail doesn't work as transportation.
You need a car to get to a train station because you probably live in some suburban hellscape with zero light rail (or any other) infrastructure. I can walk five minutes to a subway station or catch a tram to a nearest train station. Because those are a thing that are part of transport infrastructure.
Rail works fine for daily commuters, city to city, inner city transportation. You still need road transportation to get to and from the rail. You posted that glowing video extolling the virtues of the Swiss rail system, but seem unaware that almost 80% of Swiss families own a car. I guess they live in some suburban hellscape too. Better let them know pronto.
You can keep your urban hellscape. Been there, done that, never going back.
Your Thinking is to constrained (Score:1)
High speed rail by itself would not eliminate the need for cars but it would be a huge step towards that. As it stands now there's virtually nothing for medium-distance travel except cars. You're not going to take a plane for that unless you're very wealthy.
Also the costs for Amtrak are high because not very many people use it. There's not a lot of economies of scale there. It also doesn'
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With the way some people talk I expected everyone to have retired from those checks.
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Elon Musk basically spend a billion dollars on a scam that was discredited in the 1920s just to keep California from putting in high speed rail.
I find it hilarious that you have no clue how badly the California 'high speed rail' project is being run. Elon Musk could have given that billion dollars to California instead and it wouldn't have made a dent in it's construction.
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Standard family of four got enough to pay for 1/4 of a new family truckster.
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all 4 of them.
Mtg cardboard and ps5's (Score:2)
Plenty of peiple had no need for it and 'invested' the money into whatever thats now crashed
Re: The stimulus checks paid rent and bought food (Score:1)
According to the stats, most of the stimulus checks were saved or used for non-food items. Money is fungible but most of it went into savings, debt or non-durable goods.
And that is what helps inflation, you have too much money floating around with no product to spend it on. This causes inflation.
Re: our entire civilization is built around them (Score:1)
in the year of our ford 119 it will take some time to unwind that design decision (not that it was consciously decided)-/
a good start would be to require new drivers not only be able to parallel park, but also pass the moose test https://en.m.wikipedia.org/wik... [wikipedia.org]
that would certainly increase the demand for public transportation;-)
Carvana has paper work issues with car titles (Score:5, Informative)
Carvana has paper work issues with car titles
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But we make up for it with volume.
Re: Carvana has paper work issues with car titles (Score:2)
Re:Carvana has paper work issues with car titles (Score:4, Interesting)
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Yes, I think this is the simple explaination.
Carvana was amazing incompetent at processing the paperwork. That led to their downfall.
Sounds like Zillow (Score:5, Interesting)
Carvana's humans bet badly by buying too many cars. Throughout 2021, as Carvana saw its first and only quarterly profit, the company kept telling investors how it planned to scale up production (read: get more used cars ready to sell) to meet the pandemic's unprecedented demand.
Zillow decided it would be fun to start buying up homes in 2018 and flip them. Everything was going great until demand plunged during and after the pandemic. Then they had to offload thousands of homes at a loss [theverge.com] and fire thousands of its staff [cnn.com].
Varvana is doing the same thing. They've fired thousands [engadget.com] (over Zoom no less), the C suits are foregoing salaries [marketwatch.com] for the rest of year, and the company is bleeding cash [yahoo.com] almost as bad as Meta.
$7/share might be a tad on the optimistic side.
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I can see how these firms might believe that automating acquisition will be profitable. But I am in a market for a car and what I see is Carvana is not buying the range of cars that insures every customer sees a product they want.
I'm seeing a pattern here... (Score:4, Insightful)
Carvana, Zillow, OpenDoor...all of these businesses that have traditionally conducted sales in person tried the online model. It has largely failed, mainly because the algorithms they use are flawed. They overestimated the values of cars and houses and overpaid for them. Now they are stuck with a glut of inventory they can't get rid of in a market where interest rates are going up. Given that the vast majority of people finance car and house purchases this is a huge problem for them.
Bad news for stockholders but good news for anyone looking to buy a home or car over the next 6 months or so.
Re:I'm seeing a pattern here... (Score:5, Insightful)
I do not think the algorithms are flawed. I think the input data is flawed and incomplete. If you have an expert evaluate a car or a house, they do a lot of things that are not obvious to a non-expert to get data, quite a bit of it subtle. If that data is missing, no algorithm can compensate.
My take is that these were "managers" with "visions" and a hugely inflated sense of their own skills. The only thing that can replace an expert in most situations is a better expert.
Re: I'm seeing a pattern here... (Score:2)
If your algorithm doesn't include error bars based on your ignorance, you shouldn't be using it to trade.
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If your algorithm doesn't include error bars based on your ignorance, you shouldn't be using it to trade.
1. The error in the case of zillow at least stems from the fact, I understand, that its machine-learning model was being asked to extrapolate outside the range of its training dataset, but the financial models are sufficiently complicated that the humans involved don't realize that it was going outside the range of its training set. (Similar I suppose to the Challenger O-ring disaster)
2. The state of the art is that NO machine-learning includes error bars based on ignorance. And yet, if you don't use machin
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As to extrapolation outside of the training data range: quite possibly. But not being aware of that problem means you have no clue how ML actually works and just placed blind trust in it. Because otherwise you make damn sure this does not happen.
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Idle speculation ('cause that's what we do on /.) but I think its likely the opposite. If you took some machine learning algorithms and fed it the complete history of Kelly Blue Book prices and used that to try and price used cars, you would likely have some sane pricing. However with the covid-induced supply chain issues, and the used car market getting super bid up, you likely couldn't (via your algorithm) buy any cars because people were being pretty irrational and paying way more than they should have
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p>Anecdote: Neighbor ended up paying $7500 over sticker on a Hyundai SUV in the pandemic.
Irrational panic does not make for good business decisions....
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The Algorithm can't fail, it can only be failed!
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Ah, implying there can be worse things than inflation and blindly following the popular view of Volcker policy isn't double plus good, a sure way to destroy Karma. Politically incorrect from all sides. Can't vote you back up though, already posted.
(Of course Volcker didn't ran the Fed during the actual supply crisis and real GDP was growing again before he came in.)
Old Story (Score:2)
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This sounds like half the new businesses in the world. Start off well, get over ambitious, over expand, and go under. [...] Modern tech-based businesses are particularly prone to this
I think their rationale is like: you have 1% chance of becoming hugely, hugely rich, and 99% chance of not becoming so hugely rich, but:
* you were nevertheless very well paid for as long as it lasted,
* you were shining on social networks for a short while,
* you got to know important people that will fund you next startup idea
According to Silicon Valley lore it's fine to fail so why would you not bet on the 1% hugely rich possibility? If you try often enough you might even succeed, and for as long as you don
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According to Silicon Valley lore it's fine to fail
As long as nobody is being defrauded, this is true. The alternative is a culture where failure is not acceptable, which is one in which no risks are taken. That would be much worse.
Ignorant Disruptors (Score:2)
If you're going to try and disrupt an industry, you should know it backwards and forwards, inside & out.
It's called due diligence and all the buzzwords and frameworks in the world won't change that.
Doesn't surprise me (Score:2)
So I checked a local dealer and they had one the same model and trim, but brand new, for $1000 less.
You say Carvana isn't doing so well? I can't understand why.
Re: Doesn't surprise me (Score:2)
without driving it? (Score:5, Insightful)
Who buys a car without driving it and checking it out, especially a used car? The entire concept of buying a car through a web site, without seeing it physically, is asinine.
Re:without driving it? (Score:5, Interesting)
I'll answer that: me.
I'd classify myself as a "car guy". I do my own wrenching, worked as a mechanic for a while, have the big ol' set of tools (though in a Craftsman box, not a Snap-on), and have a special love/hate of VW products....like I think anyone who works on them does. I'd normally never even consider buying a car sight-unseen. Until last year.
We live in the NorthEast United States. My wife, with a short commute and Level 2 chargers at work for free, decided that it was time for her 2016 VW Golf to go. The perfect car presented itself after a short search: 2017 VW eGolf. Produced 2014-2019(?), it was all of the Golf goodness, but battery powered. Has a range of ~100 miles. It was, effectively, the test platform for what became the now-produced ID.4.
Here's the problem: VW never sold them in this part of the country. Something like 90% of them were sold in California, so they're literally not on the used car lots in this part of the country. The closest one was something like 1000 mile drive from here. Even if we went out there to get it, getting it home would be an adventure unless we shipped it.
Enter Carvana. They had a half-dozen available; the prices were reasonable. We picked the colour and options we liked, and for 750 bucks delivery fee and a week later, the car, which was originally titled in California, showed up in front of our house on a little rollback. The deal was this: you had 7 days and 300 miles to test drive the car. If you didn't want in that period, you called them up and they'd come get it. You'd be out 500 bucks for shipping fees if you did that, but that's it. For a car that we wouldn't have access to otherwise, 500 bucks was a reasonable chance to take.
Turned out that the car was even nicer than the pictures let on. Granted, this isn't a tuner kind of car, so if we were looking at WRX EVO's or something, I'd have been way more wary of it having the shit beaten out of it. But, those are available here though conventional means. The eGolf wasn't.
This, I think, was Carvana's key bit of power: access. For run-of-the-mill cars, who cared. For the harder to find cars, but not the exotics that have their own following, they made it very easy to have access. Cars like the eGolf, Like the Fiat 500's Abarths, like Audi TT's, like the WRX's. Not rare cars, but not common on the used market in the less populated areas of the country. They found a good niche that was underserved in the car world.....and then screwed themselves.
Re:without driving it? (Score:4, Insightful)
Who buys a car without driving it and checking it out, especially a used car? The entire concept of buying a car through a web site, without seeing it physically, is asinine.
Carvana is aimed at Zoomers and Millennials, and literally everything is different for them. They're the guys who think everybody 10+ years older than they are is an idiot. They're the guys who keep re-inventing the wheel in IT because everything that came before them is crap, or so they think. Wait until the next generation decides Rust is crap. It's coming. I can understand why Linus isn't bouncing off the moon at the idea of putting in kernel support for Rust when within 10 years people are going to decide it's crap anyway. These are the guys who decided that being an "influencer" or a YouTube star was an actual lifetime career path and everybody who does it will get rich. So yeah, I get that they would buy cars differently too, even if this really isn't a good way because they think everything older than them is idiotic, which would include traditional ways of doing anything.
Re:without driving it? (Score:4, Funny)
Tesla (Score:1)
Re: (Score:2)
Yup. But the difference is that Tesla isn't keeping the vehicles, so they're just getting cash from some partner company. (The exception is if you trade in another Tesla, which they will sell themselves.) Tesla has zero financial risk on the trade-ins. The one time I looked at it, though, the offer for my old Leaf was way too low, so I ended up selling in privately for about double, but with added hassle.
Dealers often take trades and then pass them off to used car wholesalers. There's an auction site n
Those eyesore "vending machines" (Score:3)
So what's going to happen to these ugly skyscraper-stumps full of cars? [businesswire.com]
There's one in the process of being built about 5 miles from our house on the outskirts of Fort Worth; it was still under construction the last time I was by there, albeit still just a frame without glass, signage, or cars. I never expected Carvana to last long-term, and I've wondered when I see these what it'll be like in a couple of decades to drive past one that's been repurposed and still recognize it, kind of the way you can still recognize the odd former Howard Johnson's or A&P store.
I guess we may not have to wait as long to find out.
There's a bigger issue here with Carvana (Score:3)
But the bigger issue is that Carvana also sold those used cars to people on credit. And they financed it themselves, not through traditional car lenders like credit unions. And they sold it to subprime folks on really aggressive terms. Then they would package up car loans and sell those out to the market; very similar to the subprime mortgage crisis. Unfortunately for them, they held on to too much of the debt (possibly because they couldn't sell the car loan backed bonds as well as they hoped), and now they're basically a sub-prime lender of car loans that will need to repossess people's cars when they can't pay their 24% interest payments.
I normally don't point to a youtube video, but this woman here who's videos are all about the car business has a pretty good breakdown about what Carvana is and how they are a big scam [youtube.com].
Time's Arrow (Score:2)
So, knowing this now, all anyone needs to do is invent a live-backwards-in-time machine, and become absurdly wealthy.