We Sold A Car To Carvana & NYC Drivers & Fleets Shouldn't Ignore It
From the above average cash offer, even with a car that had TLC plates, to the ease of transaction, there is a reason Carvana is now the 2nd largest used car retailer in the US.
AutoMarketplace NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace on YouTube ▶️
As I’ve mentioned previously, before AutoMarketplace my background was in financial services and running an all-BMW (few Cadillacs & Mercedes’ too) NYC TLC fleet. Through this financial services and fleet operating experience, combined with the additional decades worth of driving experience of the entire AutoMarketplace team, we believe we understand not only the NYC for-hire transportation sector well, but the general automotive industry. This is why we started AutoMarketplace. We not only want to share our knowledge and opinions, but also build a helpful automotive marketplace for drivers and fleets, connecting them with trustable local shops offering competitive pricing (more to come on that very soon! 🙂).
In any case, back to the topic of this piece Carvana (Carvana.com). You may have already heard about Carvana as they’ve spent a lot of money on national advertising campaigns, but if you haven’t, the long story short is they are an online-only used car retailer. Yes, as in they have no physical retail locations or salespeople (outside of unique car “vending machines” where you can pick up a car by depositing a gigantic coin 👀). It sounds insane, but we can confirm it’s real as we recently sold a car to Carvana (see title video above). We also think it’s revolutionizing the way people buy, sell and trade-in their cars. In fact, while everyone is worried about the imminent arrival of self-driving cars, my money would be on the used car salesperson losing out to automation before Uber drivers do!
To be clear this isn’t a paid or sponsored post, we just think you need to know about Carvana.
Car Prices Have Never Been Higher
Inflation has been in the news recently as everything from food to gas prices are noticeably increasing for most New Yorkers and Americans in general. Perhaps the poster child of the recent chatter about inflation is…the price of new & used cars 🚘. To put it lightly, records 📈 are being set (see chart below) in the used & new car industry. Instead of acting like depreciating assets, people are selling their cars for record amounts. Supply chain issues, such as semiconductor chip shortages, are depleting car inventory levels to the point that some new cars are even selling for thousands above MSRP. Now, how long this lasts is anyone’s best guess and it won’t be forever. However, it’s been happening and it’s still currently impacting many.
As it relates to NYC drivers and fleets, there are more than a few issues with this dynamic. Obviously, if you sell your car, most would need to replace it. Selling a car for an above average price to then buy a replacement car for a high price, defeats the whole purpose of taking advantage of the inflated car prices to sell your car. For example, I personally know several NYC drivers and fleets who are delaying replacing their aging cars because prices are too high currently. That can setup a tricky situation where major unplanned auto repair or services work could come up and put drivers and fleets under unexpected financial stress, In addition, a TLC car can “age out” of qualifying for services like Uber Comfort and UberBlack. In addition, auto repair & services costs, are also currently subject to higher than normal inflation due to supply chain issues, increasing oil prices, etc. (We do have some ideas about how to help drivers and fleets with that, but we’ll discuss that at another time 🙂).
Why We Think Carvana Matters to NYC TLC Drivers & Fleets
My first piece of general advice to almost all NYC TLC drivers and fleets, is don’t purchase a brand new car for TLC work unless you REALLY NEED TO (i.e., high paying long-term luxury private client is asking for a newer shape or model and is paying you top dollar). Given you will put TLC plates on the car immediately and register higher than normal miles on the car, the car will depreciate at an accelerated rate. Again, in some instances a driver may be justified in buying a brand new car, but it’s almost always better to buy a quality, low mileage used car for NYC TLC work. Given Carvana is a used car retailer it doesn’t have any new car dealer franchises, therefore the site will only be relevant for those looking for pre-owned vehicles.
Building on the above point, even in a normal (whatever that term means anymore) inflationary environment, Carvana is going to be helpful to NYC TLC drivers and fleets because it’s basically solving two key issues.
Car valuations are not greatly impacted by NYC TLC history. Remember, since NYC TLC cars are commercially insured, popular auto databases such as Carfax, record ‘Taxi’ in the vehicle history section (see below). If you try to sell your car in the NYC area, dealerships often hold this against a vehicle’s valuation. Carvana though is a national retailer, headquartered in Arizona, focused on national expansion. They do not appear to care (at present) that a car had NYC TLC plates. Based on our experience with Carvana, since they come to essentially any location, they still enable easy local pickup and delivery. Carvana’s offer can easily be a few thousand dollars more on a TLC car vs. local NYC dealerships. This is a general statement, but one we’ve personally observed and experienced.
National vs. local inventory. Another benefit of being a national vs. local used car retailer is the inventory offered online is robust as Carvana has figured out how to manage the logistics of cross-country vehicle transport efficiently. For example, let’s say a low mileage used Toyota Camry in Louisiana can be bought competitively by Carvana because of various local market dynamics. Now, Carvana can offer the car to a local NYC driver at a cheaper price than local dealerships. As we said in our video, Carvana is trying to be the Amazon of the used car industry and thus far I wouldn’t count them out. They also provide financing and warranties, but we can’t intelligently comment on those offers at this time.
Carvana Isn’t The Only Online Used Car Dealership, But It’s The Largest
As we said before, this isn’t a paid post for Carvana, but we know enough about the automotive industry to say this is an “Uber-level” disruptive company. What Uber did to the cab industry, Carvana could do to the used car industry. In fact, Carvana is already the second largest used car retailer in America (only behind long-time leader CarMax). Given over 40 million used cars are sold each year in America there is a very long runway for Carvana to continue to grow as the used car industry is very fragmented (another way to say there is not one or a few dominant players that hold a majority of the market share).
A topic for another time is the good, but also negative consequences related to the disruption Carvana is advancing. For the time being, car giants GM and Ford are taking notice and have also recently launched their own online used car marketplaces for their dealerships. Other established companies, including used car leader CarMax and startups like Vroom are also giving Carvana competition. To extend the rideshare analogy above, Carvana still seems to be the “Uber” of the online-only used car retail market.
Being a NYC TLC driver and/or fleet owner is not just about being knowledgeable about the NYC for-hire transport industry. It’s making sure you are up to date on all the trends and dynamics happening across the broader automotive-mobility landscape. This will make sure you stay ahead of the curve and ideally take advantage of your forward thinking.
Please check out our Carvana YouTube video and be sure to comment with any questions or thoughts on what you think about the Company and what it’s trying to do. Do you think they will be successful? Would you use them? Why or why not? You can also email us at info@automarketplace.com.
AutoMarketplace NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace on YouTube ▶️