If you are planning on selling your vehicle to Carvana you better get cash or certified funds, because It looks like the “B” word for Carvana! Carvana is in deep trouble financially and is now facing BANKRUPTCY. Earlier this month, Carvana initiated drastic cost cutting measures and furloughed off 8% of their employees!
Carvana rocketed to stardom pitching a utopia solution (vending machine) to buy and sell vehicles to faced paced Americans who love the concept of “instant delivery”. The fact of the matter is… their game plan has failed. Buying way too many vehicles in hopes of reselling them at much higher prices along with the interest rates shooting up on used vehicles only exacerbated their troubles. Supply chain issues with new vehicle production and a volatile US economy and stock market have crippled Carvana’s Cash Flow and they have had difficulty producing titles on new vehicle deliveries in multiple states. Click here to read more about Carvana’s Financial Woes
Their largest stockholder is 66 year old, convicted felon Earnest Garcia II who has had many controversial business dealings as well as his son, Earnest Garcia III sitting at the helm as CEO. This in itself was the perfect storm, so to speak. Shady dealings, stocks plummeting 97% as well as hundreds of legal battles in Michigan and Illinois are only skimming the surface of how Carvana is suffering.
So why would someone sell or buy from a collapsing business who is already well over their heads in mounting court cases. Their failing business plan to out-do the hometown car-dealer and faulty day to day business practices resulted in the company having their dealer’s license suspended in North Carolina, Michigan, Illinois and Florida. Three of the states eventually gave in, but Michigan was not so easy on them. After months of research, the State Department of Michigan found innate day to day business protocol which included, but not limited to fraud, missing or destroyed documents, buyers not receiving titles to their vehicles sometimes up to a year later, fault-finding on odometer records, as well as erroneous use of temporary vehicle registrations. Per the State of Chicago, Carvana has sold numerous vehicles they do not have titles for and has caused major issues for buyers. These flawed routines are not new, they have been Carvana’s way of doing business since their beginning and just one of the many causes of their failure.
If you are looking to purchase a used vehicle Carvana’s Model will not lead to financial efficiency and the time you save on the front end, you will pay dearly for on the back end. That old automotive cliché personified “you can pay me now, or pay me alter” is true to life with Carvana. Get the popcorn, the show is going to be pretty gory.
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