Welcome to Tesla Motors Club
Discuss Tesla's Model S, Model 3, Model X, Model Y, Cybertruck, Roadster and More.
Register

Like new 2021 Standard Range Blue Model Y with White Interior

Lefix

Member
Mar 20, 2021
96
14
Tracy
Can you clarify what did you mean with "wide mirrors"? Your side mirrors look standard to me.
These are the mirrors I got. They greatly improved vision on blind spots.
EEA47520-370E-4699-A68E-EAC89170949E.jpeg
 

loanchau2k

Member
Nov 25, 2020
147
77
Fremont, CA
The dealer will mostly be making money from the bank who will lease the car.

Note: The car will certainly be sold with, at least, a 6 years and 4% loan, or a $900 monthly payment (no included taxes and fees), so the total interest fees will be around $10k, making every body happy...
Dealers might have some commission like a regular loan officer, I doubt dealers would get a lot of money. Bank needs to compete with their interest rates too so their margin is also small. The way it works is the bank will bundle all the loan and sell it to Fannie Mae and Fredie Mac (back by US treasury) and that based on 5 years rate, I know for sure mortgage do things like this, but I do think it applies for all loan. So, if you look at the current treasuring rate at 3%, the bank lend you 4%, bank probably make 1% or less, not the whole 4%. Even the bank get full 4%, and interest fees 10k, they don't get full 10K since you need to factor in inflation
 

loanchau2k

Member
Nov 25, 2020
147
77
Fremont, CA
You do realize not all dealers turn a profit on the cars. Look at Carvana, they had their first profitable quarter. They have been bleeding money. Being a used car dealership doesn’t mean you’re a professional.
They have been bleeding money because of their business model, investing and expanding for long term, not buying and selling at a loss. It does not make sense to have a business that buys high and sells low. You show me an article in that Carvana says they are bleeding money because they buy cars more expensive than they sell.
 

jevan43

Member
Jan 2, 2016
180
63
Austin, TX
They have been bleeding money because of their business model, investing and expanding for long term, not buying and selling at a loss. It does not make sense to have a business that buys high and sells low. You show me an article in that Carvana says they are bleeding money because they buy cars more expensive than they sell.
This isn't exactly what you asked for, but will help to shed light on their specific business model:


"Part of the attraction to investors: selling cars is only part of what makes Carvana money. In the second quarter, around 36% of the company’s gross profit per unit came from selling loans it made to customers to buy the cars. Retail sales accounted for 39% of gross profit per unit, Carvana’s preferred earnings measure. Other types of income, including from vehicle-servicing contracts, made up the rest."

"When Carvana makes a car loan to a buyer, it packages it with other loans and sells the debt to investors. While other auto lenders also sell loans to investors, they typically keep the debt on their books, recording gains and losses over time. Carvana, on the other hand, doesn’t retain the debt and immediately books gains on the cash sales."
 
  • Informative
Reactions: zpaul

Kairide

Member
Jul 13, 2021
189
232
CA
They have been bleeding money because of their business model, investing and expanding for long term, not buying and selling at a loss. It does not make sense to have a business that buys high and sells low. You show me an article in that Carvana says they are bleeding money because they buy cars more expensive than they sell.
Seriously, just Google Carvana losing money or Carvana bleeding money and numerous articles will pop up. Below is one, with an excerpt clearly showing they "buy cars more expensive than they sell".

Motley Fool - Will Carvana Ever Be Profitable?
Excerpt:
Additionally, they point out that Carvana lost $1,500 on every car sold last year, taking overhead costs into account, and even conventional dealers tend to make only a slim profit.
 

Zorg

Active Member
Oct 24, 2017
1,896
1,741
Fremont, ca
Seriously, just Google Carvana losing money or Carvana bleeding money and numerous articles will pop up. Below is one, with an excerpt clearly showing they "buy cars more expensive than they sell".

Motley Fool - Will Carvana Ever Be Profitable?
Excerpt:
Additionally, they point out that Carvana lost $1,500 on every car sold last year, taking overhead costs into account, and even conventional dealers tend to make only a slim profit.

You're confusing gross margin and net income. Carvana sells cars for more than it pays for them. That's called gross profit. In the six months ended 6/30/2021, they had sales of $5.6B and gross profits of $890M. Their investor deck shows that the average gross margin per car is over $3K. So, they don't sell cars at a loss. However as a business, they're not making money because of overhead. In the same 6 months, they lost $14M. Now, they're burning cash pretty quickly and keep borrowing to finance their growing vehicle inventory.
 

loanchau2k

Member
Nov 25, 2020
147
77
Fremont, CA
Seriously, just Google Carvana losing money or Carvana bleeding money and numerous articles will pop up. Below is one, with an excerpt clearly showing they "buy cars more expensive than they sell".

Motley Fool - Will Carvana Ever Be Profitable?
Excerpt:
Additionally, they point out that Carvana lost $1,500 on every car sold last year, taking overhead costs into account, and even conventional dealers tend to make only a slim profit.
@Kairide , lol, that does not mean they sell cars at a loss. They might make over $5000 a car, but average out, they still lost 1,500/car due to expenses and invest in another business area. Anyway, I don't think you understand, no point to take it further
 

Kairide

Member
Jul 13, 2021
189
232
CA
@Kairide , lol, that does not mean they sell cars at a loss. They might make over $5000 a car, but average out, they still lost 1,500/car due to expenses and invest in another business area. Anyway, I don't think you understand, no point to take it further
It does, if the cost of selling a car, including the cost of the car + overhead is more than you sell it for, then you are selling cars at a loss.
You can sell a unit that cost $5 to make for $10, but if it costs $20 a unit to sell, then yes you made a profit on the product but are selling it for a loss overall.
 

Kairide

Member
Jul 13, 2021
189
232
CA
You're confusing gross margin and net income. Carvana sells cars for more than it pays for them. That's called gross profit. In the six months ended 6/30/2021, they had sales of $5.6B and gross profits of $890M. Their investor deck shows that the average gross margin per car is over $3K. So, they don't sell cars at a loss. However as a business, they're not making money because of overhead. In the same 6 months, they lost $14M. Now, they're burning cash pretty quickly and keep borrowing to finance their growing vehicle inventory.
Yes, hence they had their first profitable quarter due to the crazy used market prices. I was talking pre-pandemic.
 

loanchau2k

Member
Nov 25, 2020
147
77
Fremont, CA
including the cost of the car + overhead
Ohh boy, the whole argument was about the car that dealers buy is less than when they sell. Now, you put on overhead which is the part we have tried to explain to you, which is the whole point we are trying to make. Dealers make money on cars, but their overhead is high, therefore, they lose money. That does not mean they buy car high price and sell low. So, you agree that dealers buy cars at lower prices than they sell, right? End of argument. The overhead cannot comes into an argument, because of their business model. Some dealers have high overhead, some dealers don't. For this case, Carvana has a high overhead, but it does not mean they are stupid to buy car at a high price, which is your argument in the first place. We kept telling you the reason Cavana lost money was because of their overhead, not because they buy cars at a high price. Anyway, we should end this, it becomes very silly.
 

Products we're discussing on TMC...

About Us

Formed in 2006, Tesla Motors Club (TMC) was the first independent online Tesla community. Today it remains the largest and most dynamic community of Tesla enthusiasts. Learn more.

Do you value your experience at TMC? Consider becoming a Supporting Member of Tesla Motors Club. As a thank you for your contribution, you'll get nearly no ads in the Community and Groups sections. Additional perks are available depending on the level of contribution. Please visit the Account Upgrades page for more details.


SUPPORT TMC
Top