Specialist
Former product manager at Carvana Co
Agenda
- Online used car industry trends and developments, focusing on Carvana (NYSE: CVNA)
- Implications of Carvana’s acquisition of Adesa
- Competitive landscape including major players such as Carvana, Carmax (NYSE: KMX), Vroom (NASDAQ: VRM) and Shift Technologies (NASDAQ: SFT)
- Volume and GPU (gross profit per unit) trends outlook amid inventory scarcity
- Mid-to-long-term outlook
Questions
1.
Could you share 2-3 key trends or developments that you’ve been following in the online used car industry?
2.
You touched on Carvana’s acquisition of Adesa and specifically pulled out the Vroom dynamic. What might be the implications of this acquisition for players such as Vroom? I understand some of those Vroom third-party reconditioning centres are actually Adesa facilities.
3.
Are there any cons to the Adesa acquisition for Carvana?
4.
The potential downfall for Vroom you discussed makes sense. Could Manheim support or even be incentivised to support a player such as Vroom, given the developments at the beginning of March 2022?
5.
What are your thoughts on the potential attrition of Adesa customers, given the new ownership?
6.
What impact might the Adesa acquisition have on Carvana’s digital business? As you consider Carvana’s digital platform, do you think it now has the assets it needs? Is it complete, or do you think the company could continue to consolidate further with perhaps another digital platform? Perhaps something is left out of the portfolio that it should still look for?
7.
General Motors introduced CarBravo, which is a new way to shop for used vehicles. What might be the implications of CarBravo? How might OEMs [original equipment manufacturers] try to help their dealer networks compete with Carvana in the used car business?
8.
Obviously, Lucid and Rivian probably aren’t producing enough cars for it to be a factor for Carvana, and it’s not a new invention and perhaps they’re not struggling, but could a partnership with a new EV [electric vehicle] company that hasn’t mastered distribution yet, such as Lucid and Rivian, be possible for Carvana?
9.
One of the trends you discussed earlier was this push to build up future inventory, given new cars have stalled. Obviously, there have been some bottlenecks with semiconductors and supply chain that has impacted the production of new cars, so what might that future inventory pressure look like and how are players such as Carvana assessing this?
10.
I’ve heard new cars that are being made and sold in 2021 and 2022 are coming out with fewer features, given the semiconductor shortage. What is the time frame for these 2021 and 2022 cars to make their way onto a used car platform, and how might having fewer features impact these cars’ prices?
11.
We’ve talked about Vroom and a little bit about the dealership and OEM entrants. What are your thoughts on the competitive dynamics between Carvana and CarMax? I understand CarMax has also entered the wholesale business, and it’s trying to build up its omnichannel capabilities.
12.
How does Carvana compare to CarMax’s capabilities around sourcing and inventory levels?
13.
How would you characterise the demand environment for used vehicles in the industry and for Carvana? What are your thoughts on the latest GPU [gross profit per unit] trends and how they might evolve?
14.
Do you think we’re at peak prices? Do you expect there to be more pressure on GPU? If so, when might that pressure come into play and those prices perhaps start to come down?
15.
What are your expectations for Carvana’s volumes throughout the rest of 2022? Where do you think they’ll sit and what factors will push it either way?
16.
Could you comment on the labour or logistics bottlenecks Carvana is facing today?
17.
Do you consider some of the recent regulatory issues with registration and title delays to be a significant issue?
18.
If you could summarise your thoughts and share it all together, what might be the best- and worst-case scenario for Carvana over the next 12-18 months?
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