Automotive Digital Marketing

Professional Community for Car Dealers, Marketing, Advertising and Sales Leaders

Loading... Be Patient!

Size Doesn’t Matter--Covid-19’s Market Reset for Carvana

Carvana promised a new way of doing business in the auto industry. Long before the current revamps to virtual retailing, they promised a 7-day test to own option, delivery to your door, and the ability to pick up your vehicle from a state-of-the-art vending machine.
With over $12 billion in market capitalization, operating expenses that continue to outpace gross profit, and an oversupply of inventory, it comes time to ask if the model will work. 
With tremendous downward pricing pressure on used cars due to off-lease vehicle returns and lighter consumer demand, the headwinds continue to grow even more durable as favorable finance terms for new vehicles put pressure on the model. 
Expect lower gross profit per unit from Carvana. The upside--if any--is that Carvana can weather the storm via approximately 15 months of projected cash flow.
Will things be different though--15 months out? Yes, they will, however, by way of improving operations from Carvana’s key competitors. 
Right now, there’s a huge operational opportunity for new-car, franchised dealers to pick up the pieces of the Carvana model that can work for them. It’s clear that the operational advertising and marketing message for Carvana compelled customers to change their habits. And in the new world order, the demand for Virtual Retailing will only grow as consumers expect this of their new car dealers.
Has Carvana joined the ranks of franchise dealers straying away from their previously marketed message that they will buy your car whether you buy one or not? Yes, they have. If you had any doubt that Carvana isn't feeling the same glut of inventory that franchise dealers are during this virus, just compare their marketing message (and past behavior) to their new message:
Sound familiar and different than the "We're your friend with a no-hassle experience?" Well, apparently Carvana is feeling the impact of COVID-19 as well as all other dealers. And they have had to change their strategies as well (even if they have failed to revise their marketing and are continuing to pay for inaccurate Google PPC ads.)
Many new car retailers are already adapting to the change. Cleaner vehicles now reside all over sanitized service drives and dealer lots. Advertising will continue to be more operational. And new cars -- driven by the aforementioned favorable finance terms -- will push people out of used and into new -- especially so with comparable operational experiences.
As such, Carvana’s game-changer, for the worse, will not be a major manufacturer, but rather an infinitesimally small virus that moved the world markets.
Disclaimer: Do Your Own Research, this content is for informational purposes only, and any investment decisions are strictly your own. You should take financial guidance from a professional in connection with or independently research and verify any information that you find here or wish to rely upon, whether to make an investment decision or otherwise.

Views: 23

Tags: Carvana, Doesn’t, Market, Matter--Covid-19’s, Reset, Size, for

Comment

Oops... You need to stop "Lurking" on ADM and become a more genuine Automotive Professional by completing your membership registration. As a registered ADM Member, you can post comments, publish your own articles (be a star!) and start Forum discussions. Stop being an online "Peeping Tom" and JOIN ADM RIGHT NOW!

Join Automotive Digital Marketing

Automotive Professional Network and Resource Exchange for Car Dealers, Managers, OEM and Marketing Practitioners seeking Best Practices.

ADM Sponsor

William B. Terry
Rated by Super Lawyers


loading ...

Please Consider Automotive Marketing Professional Community Sponsors

ADM Badge

Loading…

Based On Your Interests...

ADM Consulting, LLC

Onsite/Offsite Combination ADM Consulting, LLC Professional Services
Select the maximum monthly investment you plan to make
$USD
Sign up for

Automotive Marketing Tools

Get ADM Toolbar

Click here to take the ADM Member Survey

Getting too many emails from ADM? Click mailbox below to control which types of alerts and updates you are sent......


Instagram

SaveSave

ADM Professional Services
Phone Consultation
Topic or Issue:

Top Automotive Marketing Forum Discussions

1. BDC or Virtual BDC

Posted by Peter Stratton on February 26, 2020

Share the Best Content w/AutoMarketing Community

© 2020   Created by Ralph Paglia.   Powered by

ADM Badges  |  Report an Issue  |  Terms of Service