Carvana's plan won't work for long term


Wall Street got suckered by a slickster (“Carvana’s relentless stock rout leaves Wall Street struggling to catch up,”, May 11). Everyone in the used-car business knew that Carvana could never be profitable long term under the current business plan.

Because the marketplace determines a vehicle’s selling price, profit in the used-vehicle business is all about controlling the costs. Carvana’s costs are more than double the industry standards, and their gross profits are below industry standards. There is a reason the most profitable used-vehicle retailers don’t have massive marketing budgets, vending machines and a fleet of delivery trucks (and drivers).

Profitability in the auto business requires knowledge and skill that Carvana executives and Wall Street investors lack. The current situation is proof that one should not invest in a business they know nothing about. Maybe Carvana will survive (and that’s a pretty big maybe) and eventually make a small profit, but if that is to happen, the business plan and marketing concept will be much different than it looks today.

ANDREW BUDD, President, Country Chevrolet Inc. Warrenton, Va.