Dmaxdmax

I looked for RX350s and got 14 items, one of which was tagged "great value" and indeed it does seem to be priced a little more aggressively. It hasn't even hit their "floor" yet so I know it isn't a stale item that they want/need to move. Why would any one car be priced more or less than a comparable one?

Might they charge a fixed % over their acquisition cost? Maybe it's just marketing so a customer will rave about the "great deal" he found on Carvana.

UDel

I don't know but I always found them at least $2K or $3K overpriced if not more and they don't negotiate. Never really considered them because of that.

Dmaxdmax

That isn’t the case here, in part because there are few if any private sellers. Carvana isn’t competing with Joe Owner, it’s competing with new and used dealers all of whom want their vig.

Lexyaaaas

iTrader: (2)

Can you even go look at a car forsale by Carvana?
My thinking was their prices are great because you cant see the car before its delivered

oldcajun

Not so! Carvana gives you 7 days after delivery to be satisfied. If not, return the car. Name a dealer that will give you that option.

Dmaxdmax

You don’t pay ahead of pickup and you don’t have to accept it. You can walk at any time up to 7 days after the sale. There’s some mileage limit but it’s pretty high.

pbm317

They're going to price just like any other dealer entity, ideally above where they acquired the car for, and keeping a pulse on where they could dump it at a wholesale auction. Sometimes they may get burned by holding on a vehicle for a certain price for too long. As they say, the best loss is the first loss. Huge inventory interest costs, logistics, etc. Big swings in what used cars, even of a like make/model/mileage can be taken in for.

They're aggressively expanding, and as seen even in this thread, different experiences can vary significantly. We got a quote from Carvana, Vroom and Carmax when we were trading in my wife's C-Class, all were similar, but nearly $4K lower than AutoNation, which has a similar online quote system that then gets confirmed/finalized at one of their dealers. But I could guarantee you that there are people that will simply take the Carvana/Vroom type offer because it doesn't involve them having to go to a dealer, they don't know, or don't want to do the legwork.

Wandl

This isn't my personal experience but a friend sold his (2014 I think) Honda Pilot with 39k miles to Carvana for ~$700 more than what he was getting for dealer trade; Carvana listed the Pilot up about 1 week later for $1900 more. It sat for ~5 weeks then sold without a price adjustment.

I think the Carvana model works well because they have a lower front-end mark-up, the 7-day return policy is great, and I've personally found their prices competitive. The lowest price? Never...but for the price of a hassle-free purchase without pushy finance/warranty add-ons, it is worth it to some people.

To pbm317's comment on a C-Class $4k discrepancy, think it is smart for shoppers to cross-shop especially on their trade values but the one-stop-shop appeal gets a lot of buyers...

Dmaxdmax

That’s a rational decision when two people are making a joint decision while working 50 hour weeks and dealing with kids or general life. Get a good car at a good price in one evening vs the chance of a better car at a better price after a month of web scouring and dealer visits. 20 years ago my best friend, who knew nothing about cars, bought a Saturn because the price was set and he could get it done in one visit. Didn’t care if it wasn’t the best in class, it was good and affordable and easy.

Wandl

Bringing up an old thread - public companies need to have financial transparency and Vroom's latest earnings call shows their gross margins (mark-up between wholesale price and sold price) is barely over $1,000 per car.
About 15 years ago when I was in the industry, the gross margins were in the mid $2k range per car and from my conversation with dealer friends today, that remains the goal.

All that to say Vroom doesn't mark up their cars much and fellow digital players like Carvana usually are in that neighborhood as well...

pbm317

Used definitely has more "gross" margin for dealers today than New, but it's such an ultra hyper competitive space and amount of information available to consumers, that they're definitely getting squeezed much tighter than the past, especially if you take into account the floorplan (interest) expense, any marketing, clean up, etc. No doubt it's still a highly lucrative business if you can get the volume, and also start to add anything ancillary like financing or insurance products. But the margins aren't quite what they used to be on the sales side.