Chris Collins compares how Carvana and traditional dealerships buy used cars at auction. Carvana appears less disciplined in its purchases, driving up reconditioning costs that get passed to buyers through higher prices. The company may avoid states with strict consumer-protection rules like California and Colorado, preferring Texas's looser regulations.
I don't perceive, and I could be wrong, but I don't perceive that. They're very disciplined in the buying. So it feels like they're, they're buying edgy used cars as much as getting lucky on ones that aren't edgy. But there isn't a real clear discipline there. And you know, with a used car manager, a lot of times the discipline is what, what prevents all this. Right. Like you're, you're not going to buy something with the frame or flood damage, you know, whatever it is, there's a discipline there where you actually will look, you'll actually go do a trade walk and look before you take it in. And you know, you can see like, hey, it needs fifteen hundred dollars in tires, it's leaking oil. And you can kind of like in your mind go, okay, this is going to be 3,500.
Instead of just buying at the auctions like I think their, their business model is. And they're not as disciplined in the, the buy the. So then it creates the issues on the back end.
Yeah. Our inventory manager was purchasing some vehicles at auction and sure enough, he got outbid by Carvana. If it's rolling downhill, they're spending so much to be able to purchase these vehicles, well, then they have to spend more money to recon the vehicles. If they do, then they have to spend more money. It's gonna pile on to where they're gonna have to, to make a profit. They're going to have to sell the used cars that they have for more than what you could buy it at another dealer for. People are gonna start seeing that, you know, because people are not just looking at one specific place to buy cars now. Because if you go online, you can see thousands of different vehicles right there. And so if they pick, if they see the same type of vehicle that they can see at Carvana and they see it somewhere else, $1,500 cheaper. I mean, what's the point? You know, everybody's going to go for the price anyways.
Yeah. I wonder if they're going to avoid states. So far they've avoided California, but I wonder if they will avoid states that have more consumer friendly.
Laws, you know, that you have to recon to a certain degree and take it back in a certain amount of time. Because those laws are, you know, widely different by state. In some states, you don't even really have to recon. It can be as is. Yeah. In other states, you can't even turn a car over if you don't, you know, if it doesn't have tires and brakes and Colorado's like that. Yeah. So they might avoid those states too. I'm curious to see what their plan is. I know some of the used car franchises avoid the states that have the more consumer friendly laws. It is in Colorado. That's where I. What is it? What are the, the laws in Ohio when it comes to used cars?
Well, I'm in Columbus, Indiana, but I've only been here. Yeah, I've been here about four or five months. When the service manager position opened up, I took the job here. I moved from Texas. Texas, yes.
Have you had any good tacos in Indiana? No, I'm going to tell you right now, you haven't.
If anybody from Indiana is watching this, I don't mean this personally at all whatsoever, but the food here is horrible. Yeah.
It's not news to them. They don't, they, that's not going to surprise anybody.
I miss the, I miss the Texas food so much. I, you know, but there's, there's places in Texas that they've got some of the same laws that they adopted, just like California with the emissions and so I mean if carvana. I know that they sell in Texas, but they, they can't sell everywhere because if you try to get your vehicle registered and the check engine lights on, you can't.
Yeah. No, I mean like in California you can't sell a car if like the tread isn't over like 50%. The brakes have to be more. And Texas is a little more free in their consumer laws. Yeah, it's just different. Yeah. It's always funny to me when I go to the Midwest like that, like to Indiana and then my client wants to take me to Mexican food and I'm always like, this is going to be bad. Yay.
No, I tried. I actually did try. I had people that recommended a place to me and.
Never again.
Thanks so much for watching this clip of Service Driving Revolution. We're uploading new stuff every day, so make sure you subscribe. Subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333-ASK SDR and we'll answer your question on the show. That's 8333 Ask SDR for special deals on our books and training. Head over to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com I'm Chris Collins and I'll see you in the next video.
