Dealership MarketingOpinions & Advice

Carvana Claims They Offer a New Way to Buy a Car… Hmmm…

 

A new way to buy a car? Did you know there was a new way to buy a car?

If you pay attention to television commercials, you may have noticed the latest anti-dealer spot from Carvana (NYSE: CVNA) where even the lowliest dealership employee – in this case, the Wavy Arm Guy – forgoes the dealership experience in search of a new way to buy a car.

(This commercial, for those who want an historically accurate post, seems to be an update of Carvana’s previous Wavy Arm Guy ad that called the company “a better way to buy a car.” Changing the message to “a new way to buy a car” earned the ad a rebirth, I surmise.)

Basically, the ad is telling us we can buy a used car without visiting a dealership… and even have it delivered right to our home.

Wait? You mean…I can buy a used car 100% online and have it delivered just like I could for more than a decade via eBay Motors? Or, just like I can at hundreds of traditional dealerships across the country right now? This, you say, is a new way to buy a car?

Of course, what the commercial doesn’t tell you is that the Wavy Arm Guy’s way of avoiding the dealer – that is, his new way to buy a car – is to buy his car from a dealer. (Albeit, a dealer who delivers the car to the Wavy Arm household on an expensive flatbed.)

Carvana is a Car Dealer

Carvana, I’m sorry to have to tell you, is a car dealer. Moreover, they’re not just a car dealer; Carvana is a used car dealer.

Carvana, for all those who look at their vending machine as some sort of Silicon Valley savior meant to free the world from the chains of the nasty car dealers, was founded in 2012 as a subsidiary of DriveTime (a chain of buy-here/pay-here used car dealerships that was previously called Ugly Duckling). Carvana’s CEO is the son of the DriveTime CEO.

None of this makes Carvana bad, of course; it’s just important that consumers understand that a dealer is a dealer. There are good dealers and bad dealers. (Some dealers, you’ll learn later in this post, even have lousy reviews online.)

It’s also important that consumers understand that hundreds of dealerships (and more every day) allow you to complete the purchase fully online right on their website. Of course, if you read Carvana’s site you’ll be told that “Carvana is the only place where you can buy a used car online and have it delivered to your home.”

Am I allowed to call bullshit here?

Used Car Realities

Car buyers likely don’t know this, but the retail net profit that the average dealer makes on a used car is under $200. Understanding this, it’s hard to see how removing the cost of the salesperson, but adding the costs of home delivery, 7-day returns and a vending machine can be a long-term venture if the goal is to turn a profit. 

The reality in 2018 is that used cars are priced-to-market at nearly every dealership in the country. This means they are priced at or near their expected selling price. Gone are the days of haggling away for hours to knock $2,500 off the price.

In 2018, if the average dealer has an extra $250 to give you on a used car, it’s because the unit is aged and will likely go to the auction next week. If you truly want to avoid the haggles and hassles of buying a used car, go to a site like UsedCars.com, find the online price of a vehicle you like and send the dealer a note confirming availability. Then, show up, test drive and buy it.

The days of haggling and hassling over the price of a used car are long gone at most dealerships. The primary reason it still happens today is that consumers were taught for a hundred years that they had to haggle.

Looking for a New Way to Buy a Car?

As I wrote, there are hundreds of traditional dealers that allow you to buy online today. Of course, including Carvana, Tesla, eBay Motors and every other online sales outlet for vehicles, only about eight tenths of one percent of all vehicles purchased in the U.S. in 2017 were done so via an online transaction. (That’s about one in every 125 vehicles sold. This, after more than a decade of eBay and Tesla.)

If most used cars are priced-to-market and lots of dealers allow you to buy fully online, the key really is: Where are you going to find the best deals on the most reliable cars?

To sell you a used car, a dealer needs to first buy a used car. This fact includes dealers who try to act like they’re not dealers, like Carvana. Carvana, just like your local Ford dealer, must acquire inventory to offer for sale to the public.

Unlike your local Ford dealer, Carvana cannot rely on trade-ins from new car sales (they don’t sell new cars) and the typical trade-in for a three-year-old vehicle priced at $20,000 isn’t something Carvana (or your local Ford dealer) is likely to recondition, stock and offer for sale.

Additionally, when the Ford Motor Company holds a sale of vehicles coming back from rental and other fleets, they typically only invite Ford dealers. (This is called a closed sale; and used car dealers like Carvana aren’t invited.)

This leaves dealer auctions as the primary place for Carvana and the other used car dealers to acquire most of their inventory. Auctions, by the way, that offer vehicles rejected by other dealers. This means that dealers who only sell used cars often sell those vehicles that other dealers have decided they didn’t want to sell.

Auction fees and the cost of transporting vehicles from the auction make this endeavor a whole lot more expensive than acquiring an in-market trade-in from a consumer.

Is a Vending Machine Better?

Of course, the bottom line in Carvana’s marketing to the masses is that they provide a better customer experience by allowing consumers to bypass the traditional dealership experience and buy online from Carvana.

This begs the question: Does Carvana really provide a better experience?

Hmmm… I wish I knew the answer to that question, but I do not. I’ve never bought a vehicle from them. They have a slick website and cool commercials, but according to the customer reviews I’ve read on sites like highya.com, their “experience” leaves a lot to be desired. (As of this writing, Carvana enjoyed a 2.7 out of 5 stars rating after 112 reviews on highya; with only 40% of reviewers willing to recommend Carvana to a friend.)

No Test Drive? Is this the New Way to Buy a Car?

Finally, Carvana’s 7-day return policy is a nice carrot, but a lot of people won’t send back a bowl of cold soup in a restaurant let alone a $40,000 car that feels “odd.” Barring damage or misrepresentation, most everyone would simply live with their purchase rather than seem petty by returning it to Carvana.

This is why about 96% of millennials said it’s important to test drive a vehicle before buying (Source: adage).

I don’t know about you, but I’d like to test drive a few models before buying my next vehicle – especially when we’re talking about a used car. To me, this new way to buy a car seems pretty silly, especially given all I (and now you) know about the car business.

The bottom line on the new way to buy a car? Do your homework; contact the dealer in advance to check availability; schedule a test drive; show up; drive it and buy it.

That’s the new way to buy a car!

Carvana Adds 3D Augmented Reality with Acquisition of Car360 - http://www.thebanksreport.com/dealers/carvana-adds-3d-augmented-reality-acquisition-car360/
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    Terrell Simien
  • February 21, 2019
Zero stars is too good for this horrible company. I have purchased 2 vehicles from Carvana with no issues. This third time was not a charm. I am not bitter about not being able to finance through Carvana's in-house, but I am upset how I reserved one vehicle and over 6 weeks later it is not available due to being repaired. Okay, no biggie, I chose another vehicle and was asked to make an outrageous down payment because my $70k+ salary was not enough to be financed for a third vehicle in over 3 years dealing with Carvana. I was told by underwriting to do a 3rd party finance and then boom I noticed a $100 charge for the vehicle that was ready for purchase that I was unable to finance through Bridgecrest. I am done with Carvana and I hope this company tanks.
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    Richard Bankston
  • March 21, 2019
Had a horribke exoerience with Carvania. They postponed delivery 4 times for issues w ith the car, damaged in transport. They offered me $250 for the delay. Was finally scedule to recieve and get a call the day before saying another issue on a car with only 8500 miles. Final straw, cancelled the deal. Next day went to dealership and walked out with a great car 2 hours kater. Carvania is terrible
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    Kwelch
  • March 24, 2019
Cavana has been great. I hate going to dealerships and wgen i did they tried to sell me a car that has been in two accidents and both were a DUI arrest. Im in kaw enforcment and ran a back ground on the car, really wasnt worth my time. The car we got from Carvana was great fully loaded and was a lower price then the other car from the dealership. I stand by this company and give 5 stars for making it worth my time.
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    Bob
  • March 30, 2019
I’ve bought two cars from carvana and have been extremely happy. They gave me the best value on my trade in and I didn’t have to argue with the finance guy.
Me: I don’t want an extended warranty.
Finance:What if I can lower the interest rate?
Me: I don’t want an extended warranty.
Finance: What if I lower the price?
Me: I DON’T WANT A [email protected]&$ing EXTENDED WARRANTY!!!!
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    john Brackley
  • April 5, 2019
Carvana must think car buyers are really stupid. Try to see the car or test drive it, they don't even respond to an email, what a scam system.. JOhn b.
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    Ed david
  • May 22, 2019
I loved Carvana I did return 2 cars and kept the third. It was a very good experience and I never felt stuck. I could always back out completely if I didn't feel comfortable. Switching cars was 10 minutes on the phone and a few days later the new in was there. I would recommend to my friends.
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    Richard James
  • May 23, 2019
Horrible. DO NOT BUY FROM CARVANA!

Purchased a car in April and paid cash. Six weeks later they still did NOT deliver the registration and plates and was stuck with a car with temporary plates that they gave me that were EXPIRED.

CEO won't take calls, wait times on their support line is horrible and they lie. Told me repeatedly plates were shipped...and they were NOT.

If you buy from Carvana you will end up with a car you can not drive while you fight with them to get registration and plates delivered before your temporary registration expires. NEVER AGAIN. I am bringing litigation against them.
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    Toni
  • June 8, 2019
I just recently bought a car from carvana. Preapproval was simple and easy. Many cars available to select from. I had already knew I wanted a Maxima platinum fully loaded. I had already drove one while renting a car. Plia I'm a Nissan fan and have owned Alromas and Pathfinders. So I knew how a Nissan would handle. I did look at other cars offered and then went to test drive similar ones locally at Carmax. I searched within a 500 mile radius of my home to compare Maxima platinum to the one on Carvana site that I selected. Carvana was the lowest. Car was an off lease low mileage dealer maintained car. It matched 9 out of 10 features I was looking for. I didnt have to haggle with the finance guy. The preapproval process was a soft pull. Most dealers want to throw your credit application to the wind and have a ton of hard pulls. I went to Capital one for a preapproval (it's my bank and credit card company) Andy local credit union. I went with Carvana in house finance since it was simplest and no money down. Once I get my registration, I'm refinancing with Capital one for the lower rate since Capital one wont work directly with Carvana. But they will refinance a carvana/bridgecrest loan.

I had to call customer service to change pick up time. I got someone immediately and they spoke English. I ended up getting to Carvana early. Their vending machine wasnt working properly so I didnt get the big whoopty due, selfie stuff. It wasnt required though. Staff was helpful and attentive. Evweyoje is scheduled at certain times so there isnt a ton of people in the lobby. It was me, a single guy and a couple during our time. They only had 3 bays for cars once it came out the vending machine.

Overall for me it was great. I already knew what I was getting, knew what the car was worth and didnt need to deal with a shady finance guy who wanted to overinflate a loan. I would buy again from Carvana.

I'm female so I always feel like the car salesmen are taking advantage of me.

Only downside about Carvana is that they offer referral codes for $500 off sticker price if you get a code from a previous Carvana buyer, this option does not work in my state. Also I didnt ask about military discount or pricing. I'm a veteran but I felt like I paid what the car was worth. It was about $3000 cheaper than other locals and my car came with a few bells and whistles that I was expecting such as lighting package and some other things.
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    jeelward
  • June 14, 2019
I live in central PA so there are no Carvana sites near me. In fact, the closest is near DC, about 90 miles away. I found a 2015 Kia Forte5 SX with the turbo with every option available for that year and under 17000 miles on it on Carvana and I reserved it.. Mind you I was trading in a bottom of the line 2017 Forte with about 11,000 miles on it which didn't even have cruise control, (nor was it available in 2017 on a manual transmission model), so I was impressed that they offered me 13,000 in trade.

I was pre-approved and after sending in the required paperwork, (license, proof of employment/income and insurance), my car was locked down so no one else could get it. I found out it was a Texas car, just off manufacturer lease about 8 weeks prior and was at one of their Texas sites. All this happened within less than an hour. After I chose the site nearest to me, they scheduled a transfer for the next week, and stated they needed 3 days to prep the car for viewing after it arrived in DC and I would be contacted when it was ready to look at. Mind you I had the option of having it delivered or going to a vending machine to pick it up, and of course I picked vending machine.

On the 3rd day after arrival, (you can track the progress of your car when you buy from them, much like you track a UPS package), I got a call from them letting me know it would be ready anytime after 1 that afternoon. It was a Thursday, so I scheduled for Friday. I had my best friend go with me because I wanted his input. He has been working at one of the largest auto auction companies on the East coast for years so he was more versed in used cars than most people.

When we got there. they gave me the keys and asked I be back in 30 minutes to give them my decision. My friend and I drove it for about 20 minutes, tried it on the highway, in traffic, did some high speed traffic maneuvering, both impressed by how zippy the car was in traffic and how well it held the road in turns. It had been detailed immaculately. It looked like new, but what's more, it even smelled like new!

He told me it was in great condition, but he thought the price could be lower. Then I told him that price was inclusive of taxes, prep, tags, title, etc etc plus it came with a 7 year 100,000 mile warranty which covers a lot more than the manufacturers already excellent warranty and a 7 day 500 mile no questions asked return policy ( think of it as a 7 day test drive).. He told me if he and his wife had been looking at a smaller car, he wouldn't have hesitated to buy it.

Contrast that to when I had bought the car I traded in, from the dealer. My test drive was around the block, with the salesman in the back seat, and they lied repeatedly about the best price they could do. I know what you're thinking, new car dealer lie to sell a car? Unthinkable, outrageous, right. But everyone knows they are worse than lawyers when it comes to telling the truth. Anyway, that process lasted an entire week while they 'worked' on getting a better deal. Numerous phone calls and faxes later they finally met my target and I went to pick it up. That in itself took all day too.

Carvana closed the deal within 24 hours, but that was only because I did my shopping at around midnight when I had finally made up my mind. They on the other hand, had called me back with a firm decision at around 9:30 the next morning, so technically they only took 9 1/2 hours (although since they open at 8:00 AM ET, it was in reality only 90 minutes)

Maybe all you haters had a bad experience or maybe your're new car snobs who expect a new car experience for used car prices or maybe, you work for new car dealers and you're giving 'fake news' stories to discredit the competition, This particular site was also the one where a local favorite restaurant was given negative reviews by people who had never even been to it but just because they 'heard' it was a terrible place by competitors- what a surprise there.

I could go on and on about the negatively skewed ratings sites, but here are several things to consider: 1) How do you know if the rater has actually been there, 2) How do you know what the rater is accustomed to, 3) How do you know if the rater has personal reasons to see the rated facility fail or not,

Remember that first and foremost, value is defined as the perception of usefulness in providing a desired item or service. I have a decent job making just north of $30/hour but I'm a twice divorced sexagenarian whose previous spouses decimated any chance of ever having good scores again, and in my instance, Carvana was infinitely better than the alternative buy here pay here rip off joints people in my situation normally are presented with.. They also deliver what they say they will.

If I have any reservation at all about my purchase, it's that the stated color of 'blue' while technically accurate (as defined and listed by the manufacturer), but in person it's more gray than blue. Oh and a 200hp/ 195ft/lb torque engine makes for difficult starts in the winter :) But those are most definitely NOT the fault of Carvana.
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    Cobra9652
  • July 16, 2019
I have bought more used cars in my lifetime than I care to admit. I have purchased three with Carvana and could not be happier. When the dealers start letting me test drive for a week, then test drive another and another for a full week, or undo any deal in seven days and not even ask the reason,.... Then I may return to the dealer. I would also want them to charge the same dealer prep fees as Carvana (zero dollars), let me bypass the vin etching, paint protection, fabric protection, credit life, gap insurance, lifetime oil changes, etc. without a finance manager whining and wringing his hands. I also want a free 100 day warranty on my vehicle regardless of mileage or model year. Yeah, I think this is a new way to buy a car and I’m an old guy that finds it refreshing. I am looking for a car for my granddaughter now, at guess where?
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    Leighann Scott Boland
  • August 7, 2019
This has been a bad experience since the beginning - and unfortunately, it's not over. My coworker had a great experience with Carvana, so we decided to give it a try....And even if you have
a good experience, be prepared to have to wait hours for a call back on even the smallest issue.....We loved the first car we test drove - a 2014 Expedition - but it had a slow leak in the front tire. We notified Carvana and made arrangements for them to pick up the car. In the meanwhile, we found that my husband's financing terms with Carvana were much better than what I had been quoted. We asked that when they returned to car to us, we switch the financing to him. Then Carvana lost the car. Then Carvana said the car had been promised to someone else. Then Carvana said we could get the car..... The car was returned to us 7 days later. That afternoon when we went to drive it, the low tire pressure light was on. When we called Carvana about the tire, they said that the slow leak had been noted but since we had decided not to purchase the car (not true) they had chosen not to fix it. (Even if we had decided not to purchase the car, it was a known defect that they chose to ignore.) We were told that we'd need to take the car to an ASE certified technician and that Carvana would cover the repair - including the $50 deductible. Of course, to find an ASE certified technician, I had to log into their 3rd party warranty site using our Carvana paperwork. Guess what - Carvana hadn't entered the paperwork, so we had to wait another 24 hours. After taking the car in, the mechanic called and told us that Carvana had refused to pay for the tire and that he'd discovered a "significant" leak in the power steering line. My husband and I tried calling Carvana back beginning at 3pm today. Finally, after 7pm, someone chose to call us back. In a way, the fact that they didn't fix the leak was a blessing since the mechanic found the power steering leak. Carvana's unwillingness to accept responsibility (they continue to call this a miscommunication) is mind boggling. We still haven't gotten confirmation from Carvana that they are paying for the tire, but you better believe that we will never ever darken the door of this slap dash sorry excuse for a dealership again. As my husband said, we're going back to Carmax where they treat us like customers, not suckers.
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    George
  • August 27, 2019
Carvana's website does NOT display or offer a phone number by which a potential customer might call to get information. Seems as though they'd rather not speak with customers, just 'meet' them on the Internet. As far as I'm concerned, if they want no person-to-person contact, then I am not a customer! Simple as that!
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    Ashton
  • September 8, 2019
Just bought from Carvana. Good experience. Talked to them on the phone a few times before purchasing. Never had to wait more than 10 minutes and had no problems getting the number so I don't understand those comments at all.

Personal opinions and anecdotal evidence aside, this article is written like fake news. It’s funny and sad to see a set of yet another industry's Insiders poo-pooo the freight train that is new business models selling on the Internet. Amazon did this to wal-marts. Uber did it to taxis, Carvana will do it to the megacar plea and dealers. But that’s my opinion. On to some of the BS from this article:
First point, regarding skipping the dealer experience but oh so smartly pointing out the Carvana is a dealer. Your intentionally walking the reader past the main points of Carvana: online, no haggling, cheaper, and a seven day return. No eBay doesn’t do that an no cheesy dealer does either. As for buying completely online and delivering to your house. Sure maybe some dealers do that but they don’t center their news around that and the industry as a whole doesn’t have the credibility here. Only bullshit here is that coming out of your own pen. Fake news #1.

Second bit. I’m not sure what the hit piece comment is regarding the family lineage of the CEO. Yes he comes from a family that is in the car industry. So? You write in a nasty way so it must be bad thing. We see were you are coming from and the narrative you are paining. Fake News #2
Finally, as I realize I’m writing too much on an 18 month old post... this article. Wreaks of the last few stale breaths of a dinosaur business model that will not be missed. Laws won’t be able to protect the shitty car sales process any more and folk like the author will reminisce of the times they could sell the public on the $250 markup bologna. Good ridden.
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    Michael Corrieri
  • October 8, 2019
Friends don't let friends buy Carvana. I bought a car from them, a Jeep Overland V8, trading in a pristine Challenger RTplus V8. What they delivered to me was a car with unreported flood damage. I was suspicious of the heavy freshener in the car, but I accepted delivery. What could I have to lose, right?

After they left, upon driving the car for more than 10 minutes allowed on delivery, the windows fogged up. This is the Arizona desert in the summer - our windows don't fog here. It's then I began to carefully examine the dash, which looked wrong - big clumps under the leather.

I took the vehicle to a local Jeep dealer, who looked at it for all of 10 minutes, and told me that the car had been underwater at one point. I was shocked. I went home and studied the carfax details, to discover that the car was in the wrong place during hurricane Irma - meaning it was dead in the thick of flooding. I figured this out just from where it was serviced. Then I examined the unconnect system, and used the Nav to go home. The address was in Irma - on beachfront property.

Calling Carvana they told me that their 150 point inspection prevents this from happening, but as they, "Buy all cars from auction" it could happen. Returning my vehicle I would be responsible for the pickup charges for my car, and delivery charges for the other car.

What angers me most is all this nonsense about a better way to buy a car. The best way to buy a car is drive it, and if anything seems the least bit out of sorts - don't buy it. Nothing at all beats buying a dealer certified pre-owned, something Carvana can't even offer.

I ate the total of $700 for having gone through the process with them, happy to get back my Challenger. But now, I an only tell people this:

"Friends don't let friends buy Carvana."
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    Chris K
  • October 29, 2019
I believe the article and bad experiences especially the one that was underwater. Once a vehicle has been submerged underwater it can only be fixed with a complete growth up restoration including new wiring. Water fries out electrical components believe me I know.
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