CarMax and Carvana
I just realized CarMax has been profitable in the past 10 years. This is surprising to me, considering Carvana has long been struggling to survive, never turning a profit. CarMax is on average giving better offers to acquire vehicles than Carvana (and Vroom). How can it afford that while maintaining profit margin? What's CarMax's secret to profitability?
It’s called Carvana bro (like nirvana for cars) not Caravan
Lmao, patched👌
Carvana buys a car, ships it across the country to a service center (Indiana, Arizona iirc), then fixes it up, sells it online, ships it to buyer, all while paying more than market for the vehicle and selling for less. Somehow stock goes thru the roof. Meanwhile CarMax has buyer come to them for most of their sales.
I work at CarMax and the major difference is our operations model. As the Amazon commenter pointed out above, although we have an eCommerce model and you can buy your car 100% online, most people use our website for research and scheduling test drives but they go into our massive lots to buy. Once on a lot we have superior sales support and service and the vehicles are all reconditioned and photographed right in the store.
In terms of offers on cars, it's really just specific to model of car. If the car is projected to take months to sell, then you will get seriously lowballed while a model that has a faster turnaround time will have a higher offer. There's a loss on depreciation every day it doesn't sell
It's the ability to have all makes and models side by side in a lot. We're talking used - so the ability to inspect interior of the car you'd buy and see the exterior condition gives reassurance to buying used and you're willing to sink more $ and even buy it that day
CarMax was on average giving way worse offers than Carvana. For the two cars I sold to Carvana CarMax was giving me $4-5k less on both.
I guess it varies. In my experience, CarMax is offering ~2k more. But per Internet source, CarMax is offering more than Caravan and Vroom on average. Still, for nearly identical business model, why is CarMax killing it, while Caravan isn't?
I work for Carvana and I sold my car to Carmax. It varies.