Carvana Reconditioning Center

[catch22]

Surprised with that scale they didn’t include railroad access. You’d think with that capacity there would be some kind of economy of scale to use rail to ship cars all going in the same general direction.

On a side note… I wonder what that their risk tolerance is for hail damage? That is a lot of cars that could be wiped out in one good storm, which isn’t unheard of. With the margins on used cars even a small hail event could be costly to repair and cripple their supply chain.

[Anonymous.]

I just did the math using the area that already has cars stacked what looks to be 4 deep per row.

It comes out to around 58,000 cars at full capacity using all of the pavement with stripes.

[Swake]

Surprised with that scale they didn’t include railroad access. You’d think with that capacity there would be some kind of economy of scale to use rail to ship cars all going in the same general direction.

On a side note… I wonder what that their risk tolerance is for hail damage? That is a lot of cars that could be wiped out in one good storm, which isn’t unheard of. With the margins on used cars even a small hail event could be costly to repair and cripple their supply chain.

Or maybe with insurance payments a hail storm would be profitable. Charge a premium to self repair.

[Pete]

And remember, these are used cars and this is a reconditioning facility.

They probably have the ability to collect insurance on hail damage and then do the fixes for next to nothing.

For a new car, any bodywork means they are no longer new cars and that changes the math dramatically.

[Mott]

Surprised with that scale they didn’t include railroad access. You’d think with that capacity there would be some kind of economy of scale to use rail to ship cars all going in the same general direction.

On a side note… I wonder what that their risk tolerance is for hail damage? That is a lot of cars that could be wiped out in one good storm, which isn’t unheard of. With the margins on used cars even a small hail event could be costly to repair and cripple their supply chain.

From my time as a switchman, we used to spot 35 loaded auto carriers at the ‘new facility’ a day, for incoming new vehicles, next to the GM plant. When the UP took all the GM business west of the Mississippi, that dwindled down to almost nothing, except used cars for local auctions (ex rental). The land is right next to the SLWC main to Lawton, don’t know why they couldn’t spot cars off interchange with the BNSF or UP.

[catch22]

https://jalopnik.com/carvana-lays-of...ReP5O8otZyV_9I

Fair use:

Carvana Lays Off Thousands of Workers, Buys Car Auction Company for $2.2 Billion on the Same Day

Carvana, the used car dealer founded a decade ago whose meteoric growth was met with a fair number of problems, said Tuesday that it would lay off 2,500 employees, with executives going unpaid for the rest of 2022.

In a filing with the Securities and Exchange Commission, Carvana called the move a “right-sizing” initiative.

[Dob Hooligan]

I think Carvana has been a great tool for the founding Garcia family to generate new wealth for themselves by expanding their used car empire. Their ownership and development of DriveTime has about maxed out against the image of being a glorified note lot, which, true or not, is hard to get away from. Using the vending machine and the claim to only sell "clean CarFax, never damaged cars", they quickly resonated with millennials and people who don't like the current car buying experience.

It is beginning to appear that their approach was not sustainable, and they are becoming a traditional used car operation. I think the reconditioning center under construction will get finished and operate successfully. But initial investors will probably take a pretty good sized hair cut, and some "back of house" operations will be merged between DriveTime and Carvana.

[Pete]

CarMax seems to have a better model and higher consumer satisfaction.

[baralheia]

CarMax seems to have a better model and higher consumer satisfaction.

I've bought a car from CarMax and generally was pretty satisfied with the vehicle and the after-sales service, though it was funny watching my Dad keep trying to haggle with the salesman. Their warranty covered a seat frame replacement and a new fuel pump assembly and the process was as close to painless as I could imagine - good stuff! I don't really have any experience with Carvana, but I'm definitely in their target market and their model is certainly compelling to someone like me... so if they're still doing their thing when it's time for my next car, I'll most likely include them in my search.

[SoonerDave]

Carvana just filed an announcement with the SEC that they are laying off 12% of their work force and their executives will be foregoing their salaries for the balance of the year. This follows up a sales decline and an announcement to raise $2b in new funding through stock sales.

Sounds to me like Carvana is in deep trouble. I hope the city hasn't invested too much into that recon center. That's another area of pullback, so don't be surprised if that center doesn't happen or gets stopped.

[Pete]

^

It's been open for a while now:

Carvana said it opened three of its own inspection and reconditioning centers in the first quarter, bringing its total to 17. Those are located in Cincinnati, Oklahoma City and San Antonio.

[BoulderSooner]

Carvana just filed an announcement with the SEC that they are laying off 12% of their work force and their executives will be foregoing their salaries for the balance of the year. This follows up a sales decline and an announcement to raise $2b in new funding through stock sales.

Sounds to me like Carvana is in deep trouble. I hope the city hasn't invested too much into that recon center. That's another area of pullback, so don't be surprised if that center doesn't happen or gets stopped.

they have over 20,000 employees and spent 2.2 billion to buy a company the same day they fired the 2k employees ... so no they are not in "deep trouble"

[Dob Hooligan]

They bought the auction company in hopes the "corporate synergies" can help reduce their cost of cars. Carvana has not been a profitable company on any regular basis. The rapid growth and unique marketing allowed the founders to put together an attractive package for speculative investors when they took the company public. I think founders netted hundreds millions dollars on the IPO.

I'm not saying they're going out of business. But, I wouldn't buy any of their stock. I think in 5 years the Carvana business is going to look more like CarMax and DriveTime than Carvana year 1.

[SoonerDave]

they have over 20,000 employees and spent 2.2 billion to buy a company the same day they fired the 2k employees ... so no they are not in "deep trouble"

We disagree.

[BoulderSooner]

They bought the auction company in hopes the "corporate synergies" can help reduce their cost of cars. Carvana has not been a profitable company on any regular basis. The rapid growth and unique marketing allowed the founders to put together an attractive package for speculative investors when they took the company public. I think founders netted hundreds millions dollars on the IPO.

I'm not saying they're going out of business. But, I wouldn't buy any of their stock. I think in 5 years the Carvana business is going to look more like CarMax and DriveTime than Carvana year 1.

I don’t think we are too far apart in our thoughts.

[OKCbyTRANSFER]

Saw this on the news back home. Class action lawsuit from buyers unable to drive cars bought from Carvana, due to expired registrations

https://6abc.com/carvana-class-actio...tion/11838196/

[Jeepnokc]

Saw this on the news back home. Class action lawsuit from buyers unable to drive cars bought from Carvana, due to expired registrations

https://6abc.com/carvana-class-actio...tion/11838196/

I purchased an Audi from them last December and paid cash. It was everything but easy dealing with them and trying to pay them. Very poor communication and lots of red tape. Different story and instructions everytime I talked to them. Delivery was cancelled twice because I still had to do something even though I had done everything I was instructed to do. Couldn't just take a cashiers check or bank transfer to local dealer but had to overnight a cashiers check out of state and they wouldn't even start moving the car until then.

[Bits_Of_Real_Panther]

Laying off 1,500 employees or 8% of its workforce.

Not sure the effect on Oklahoma employees

[gjl]

Their stock has gone from a high of $360/share in Aug 2021 to less than $8/share today. Ouch if bought into it back then.

[Pete]

For all the business problems at Carvana, their new OKC facility is still processing thousands of cars.

These were taken a couple of weeks ago; it looks like there are close to 2,000 cars, not including the employee parking; and capacity for triple that:

[unfundedrick]

For all the business problems at Carvana, their new OKC facility is still processing thousands of cars.

These were taken a couple of weeks ago; it looks like there are close to 2,000 cars, not including the employee parking; and capacity for triple that:

Are these taken with your drone? I know you said not long ago that getting permission to use your drone near the airport was difficult.

[runOKC]

Are these taken with your drone? I know you said not long ago that getting permission to use your drone near the airport was difficult.

Looks like these are from Nearmap or something similar.

[Pete]

I did not take those images; they are aerial photos taken in late December.

[Pete]

This facility fascinates me.

I looks like there are a couple hundred cars in the employee lot, and then about another 2,000 cars they are processing, plus dozens of car transports.

And looks like they have capacity to handle at least 3x the amount of cars. Just crazy.

[jn1780]

That's what debt looks like in asphalt form and I'm guessing that processing building isn't being fully used either.

Luckily, they seem to be doing a little bit better this year getting their debt under control.