Specialist
Former director at Carvana Co
Agenda
- Competitive dynamics – Carvana (NYSE: CVNA), CarMax (NYSE: KMX), Vroom (NASDAQ: VRM) and Shift Technologies (NASDAQ: SFT)
- Consumer demand trends and supply disruptions from pandemic and semiconductor-related shortages
- Digital channel developments and penetration trends
- Medium-to-long-term growth outlook
Questions
1.
Could you open up the discussion by sharing 2-3 key trends you’ve been following in the online auto retail industry?
2.
How has the industry performed throughout coronavirus and what is your outlook for the market through 2022? Do you expect any longer-lasting or permanent impacts on the industry arising from coronavirus?
3.
What is the expected impact for Carvana when the new car shortage is solved? You said you don’t expect it to last until the end of 2021. How long might it be until things are normalised for Carvana?
4.
You’ve touched on CarMax and discussed some of the traditional auto dealers moving into or getting more comfortable in digital. Could you outline the competitive dynamics? How does Carvana fall into the stack? What are the characteristics of the winners or losers in this environment and which players best embody those characteristics?
5.
Could you outline the unit economics for car delivery? Are there any levers to improve that in the near term?
6.
Is there any scenario in the next five years where you think Vroom or Shift can achieve parity with Carvana in sales or market share?
7.
Lithia Motors is a player with scale that has launched its Driveway platform. Do you expect this to be a formidable competitor in time? Are there any pros and cons of Carvana vs Driveway?
8.
What are the latest GPU [gross profit per unit] trends in vehicle retail and when might elevated levels of GPUs begin to subside?
9.
How does Carvana think about sourcing cars in this environment? How do the company’s sourcing capabilities compare to its competitors?
10.
What is the relative health of Carvana’s inventories today, based on your observations?
11.
We learned earlier today that Hertz is partnering with Carvana. What is the opportunity here?
12.
Is the CarMax move deeper into wholesale a threat to Carvana or the current auction houses? How far away are we from Carvana running it own auctions? Do you think it will ultimately do that?
13.
What are your thoughts on the longer-term profitability of Carvana, relative to CarMax? Which model do you expect to be more profitable in the long term?
14.
Is CarMax far behind, or would you say that Carvana is innovating more quickly and intelligently than CarMax, as it relates to omnichannel developments?
15.
Is CarMax far behind Carvana on online conversion in markets where they have equal density?
16.
Carvana is also saying that it can do two million units at better profitability than CarMax. Are there any roadblocks to achieving this goal that you would highlight?
17.
Are there any key hurdles limiting consumer adoption of online car purchases? How is Carvana seeking to break down those barriers?
18.
You touched on one of the competitive advantages of Carvana owning all the financing side. Are there any other ancillary revenue streams Carvana could get into that would make sense? Do you have any thoughts around the investment in Root and the potential for an auto insurance product?
19.
Do you have any thoughts on the M&A market? Are there any attractive targets that would make sense for Carvana to consider bringing into the fold?
20.
There have been some recent Carvana regulatory issues with registration and title delays. Is this a significant issue or just a small bump in the road?
21.
You shared some confidence in Carvana’s management. Could you expand and highlight anything else on the management team or any moves you would question?
22.
What are your concluding remarks as it relates to Carvana? What is the best- and worst-case scenario for Carvana over the next 12-18 months?
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