![]() 07/05/2015 at 09:57 • Filed to: CAR BUYING OPTIONS | ![]() | ![]() |
Apparently you can buy a car in 11 minutes these days. At least, that’s what Carvana claims. How is that even possible? Doesn’t it take 10 minutes just to find someone to talk to at a dealer after you find a car that you like? And what the hell is Carvana?
I didn’t realize until recently that there have been numerous sites going up that are attempting to make the buying and selling process for used cars easy and, dare I say, a “ fun ” process for us. Fun? Really?
We all know that the used car market is generally nightmarish, time-consuming and entails having to deal with a bunch of crappy people only to end up with a result that is less than satisfying. If you’ve had an amazing experience then you’re in the minority because 99% of the time something goes wrong when you try to buy or sell a used car leaving you with high blood pressure, sleepless nights, and flu-like symptoms.
Can all these recently founded companies solve such an insane problem? Have these startup founders gone mad trying to tackle the world of buying and selling used cars? It is probably easier to fix global warming or even knock some sense into Miley Cyrus than it is to fix the used car transactional marketplace.
Their main value proposition is that they’re removing the middlemen like dealers and salesmen and making car purchasing much the same as buying any other product online - like your 5-star paper shredder, for instance, that you can’t wait to get your hands on - you know, the one that can rip through hundreds of pages simultaneously.
All these companies want you to do is scroll through pictures of cars while you snack on Cheetos and click “ buy ” on something that you like and then have it magically show up at your doorstep. Sounds too good be true?
If you’re thinking that you could never buy a car without actually seeing and driving the car, then hang on a second because these companies have thought of that.
If you do end up buying a car from Carvana, they will allow you to return the car after a period of time if you don’t like the car - much like Zappos where you can return the shoes you buy online if you don’t like them. That’s right - we will soon be living in a world where you can buy cars just like you would with shoes. Could this actually work?
All of this is very timely since I’m currently in the process of finding a new “used” car. My requirements are simple: I just want lots of power, a manual transmission and something that I can easily sell after driving the car for a while.
So I proceeded to buy a gigantic bag of Cheetos and started browsing through a bunch of these sites with cheesy fingers while I chomping on delicious processed, crunchy cardboard. I looked at sites like Carlotz, Carphoria, Carlypso, Carvana, Vroom, Beepi. I’m sure there are others I missed like Cars4u, Carmania, CarsEverywhere, SellUrCar, CarsNThings etc...
I started with !!!error: Indecipherable SUB-paragraph formatting!!! . This is essentially a consignment store for used cars founded by a couple of Harvard business school grads with impressive backgrounds (out of all the companies they could’ve started, they actually wanted to enter the used car market? What were they thinking???) . With so many consignment facilities out there for used cars, it’s tough to see how they’re differentiating themselves from the competition.
Carlotz supposedly makes it easy for you to sell your car by doing all the work and charging you a “$699” success fee if they end up selling your vehicle. It may be worth it depending on how big of a dealer network they have managed to create and how much exposure the site gets which could help you sell your car quickly.
On the purchasing side, they seemed to have a decent range of cars like this 2002 M5 that I really liked.
Their inventory was fairly limited albeit diverse. But nothing really caught my attention other than the M5 and so I moved onto other sites like !!!error: Indecipherable SUB-paragraph formatting!!! .
Carphoria is a startup based out of Houston and essentially has a nationwide network of dealers hooked up to its system to make it easy for you to sell your car. These guys are actually not buying your car from you; they’re just connecting you to dealers everywhere. It sounds like a simple enough concept but apparently it took two years to develop their software. Two years to develop a site connecting folks? Can’t we just do that in minutes on Facebook? Of course, I’m joking - there is more to it than meets the eye, but still, two years ???
I was curious how much they would offer me for my current car I’m looking to sell ( !!!error: Indecipherable SUB-paragraph formatting!!! ) and they gave me a range of $6,855-$8,345. Unfortunately, to seal the deal I would have to drive to Houston where they would inspect the car in person and give me an offer. Now that definitely didn’t seem worth it considering how much I really didn’t want to drive to Houston and the fact that Carmax was already offering me $8K. Why bother with Carphoria when I could just drop my car off at my neighborhood Carmax that’s 5 minutes away from me?
Carphoria also doesn’t sell cars which I was ultimately interested in, and therefore I decided to check out !!!error: Indecipherable SUB-paragraph formatting!!! .
Carlypso is a Bay Area startup founded by Stanford Business School grads that is aiming to revolutionize how we buy and sell cars. They are all promising their venture capitalists and investors that they will change the world one used car at a time. Although, it’s limited to the California area for now, the plan is to roll out nationwide in the not too distant future.
Carlypso doesn’t actually own any of the inventory you see on their site. Instead, they post cars that they find at closed wholesale auctions while the cars are still owned by manufacturers, leasing companies, rental companies etc. and then if you find something you like, they will buy it and sell it to you which is likely a scalable concept.
Selling a car through Carlypso is unique as well because they allow the buyer to test drive the car first. First they send an inspector to check out your car to make sure it’s not a disaster. After their due diligence, they send you a GPS tracking device to put in your car; people who are interested in your car will go through Carlypso to test drive and since there’s a tracking device, Carlypso will know where your car is. Or at least that’s what they say - I suppose it is possible to just get rid of the GPS and steal your car. I do hope Carlypso has an FBI agent on their board of advisors to quickly help track down stolen cars which is bound to happen at some point since a test drive that turns into theft seems like a plausible occurrence.
When or if the car does sell, they end up charging you 5% or a $1500 maximum for expensive cars. Is it worth it? It could be if you would rather watch binge-watch True Detective and Silicon Valley than sell your car - I know I would.
Carlypso does do trade-ins but it’s all in person. Sadly, there wasn’t a quote I could receive through email or on their site.
In general Carlypso appears to be really transparent with their fees; they’ll charge $750 for cars you purchase that are below $20K and $1000 for cars above $20K. They claim that that their fee is much lower to the average $2500 that dealers charge which makes sense since that is their primary competitive advantage. Carlypso seemed like a good site to me up until I ran into some severe frustrations when looking for a car to buy.
I found that conducting a simple activity like searching for the car I wanted was extremely difficult because of the fact that there were very few filters available for me to use. Supposedly they have 4000 cars in their database, but you can only search for make, model, year and color and not by transmission or any other criteria which was a shame.
Believe it or not, worse than the lack of filters was their horrible keyword search. For example, you cannot type in “335” and pull up 335s. Instead you can only search for “BMW 3 series” and look through all of them to find your 335.
And if you happen to find a model you like, the picture may not match the kind of car you’re looking to buy. Here you see a 6 series in the picture but the actual car is, in fact, a 3 series.
Carlypso feels like a site that was built ten years ago lacking simple search functionality that even your grandmother has come to expect these days when shopping online for sleep masks. Considering that this is a Bay Area startup where software developers are a dime a dozen,
surely
they can find a couple that can match the thumbnail picture to the actual model listed for sale.
Carlypso also doesn’t put any effort into making the cars look good in their pictures. There is a huge amount of variation and it’s tough to tell what kind of shape the car is really in. Granted, they let you test drive the cars, but initially you just have pictures to go of off and unless you find them appealing you probably wouldn’t be interested in driving these cars.
For example, here is a less than flattering picture with dirty scraped up wheels. The condition was marked as “like new” but I would guess that the car is anything but new.
This blurry picture from a bad angle certainly isn’t doing the Audi A6 any justice. It could be a car in fantastic shape but you’d never know by looking at these terrible images. Carlypso appears to take whatever crappy pictures the seller provides them.
Unlike other sites I will be talking about below, Carlypso won’t allow you to return the car if you don’t like it. You’ll have to find a defect with it first before you can return it for their 30-day money back guarantee. That probably means that you will most likely not be able to return the car at all unless you find something terrible wrong it - kind of like convincing your third party warranty company that the reason the window regulator broke wasn’t because you pushed the down the window switch a little too hard.
This is unlike !!!error: Indecipherable SUB-paragraph formatting!!! where their return policy appears to be a “no questions asked” policy assuming, of course, that you didn’t destroy the car while it was in your temporary possession. But how would they prevent you from completely thrashing the car around like it was the last car you would be driving before the impending apocalypse? So many questions but not enough answers!
Carvana offered me a trade-in quote through email saying that my car was worth $8531. Their trade-in offer was firm and non-negotiable which was a disappointment because other sites were actually willing to beat additional offers.
I was initially excited by Carvana but their inventory was mostly boring; they obtain cars from places like auctions, rental fleets, individual owners etc. and after scrolling through the options, I came across some ultra exciting vehicles like all these RAV4s.
And after some more searching I found this.
They are a startup so I understand not having all the kinks worked out.
Overall, searching cars in Carvana was so much better than Carlypso because I actually found filters where you can specify what you want!
There is also a 7-day money back guarantee in addition to a picture of the car showing you spots where there are dings or imperfections. Carvana is similar to Carmax in that they do offer warranties, but I would highly doubt it’s as good as Carmax’s. I’m sure Carvana would need to reach some sort of scale before something like that even makes sense from a business perspective.
I would’ve liked to actually use Carvana but since nothing in the inventory was all too appealing I moved onto !!!error: Indecipherable SUB-paragraph formatting!!!
Vroom offered me a trade-in value as well but first I had to take pictures of the car using my phone. It was easy enough to do so but I was spoiled by Carvana and Beepi where all I had to do was type in a VIN number and receive a quote almost instantly.
But it was worth it! A couple hours after I sent in the pictures, I got the highest offer from them at $9K. However, since Beepi mentioned that they would give me $250 over any offer I received, they obliged by offering me $9250 for the trade-in.
Vroom had some pretty interesting cars - quite a few actually that gearheads would love to get their hands on. For example, I found a 2012 Audi S4 with 41K miles on it that was reasonably priced with 8K miles and 16 months left on its factory warranty. Nice!
Vroom says that their prices are roughly $2K below market. They are slightly different from the competition in the sense that they own their inventory, recondition and bring them back to “ supposedly ” pristine condition. They also offer a 7-day money back guarantee like Carvana which is nice during which time you can put on 250 miles on the car that you think you want to own.
Vroom might have the best used cars ever that basically resemble new cars, but I do wonder if they can keep up this model and still make a profit if they expand this nationwide. Think about all the work needed to make these cars look good, handling returns, free shipping and dealing with picky customers like us! Can they really make that much money this way? Regardless, I do appreciate that there are people out there willing to try, because I sure as hell am not .
Beepi handles both buying and selling your car but the catch with selling your car is that it can’t be too old. I tried to sell my 2007 Mustang but the oldest car that they would take on is a 2008 model. But even with a car you’re trying to sell, they have inspectors come out and take a look. They will, however, guarantee a 30 day sale and therefore if no one buys it then they will buy it from you.
Asking about a trade-in my car on Beepi resulted in me immediately hearing back from a human ( yes, a human - imagine that! ) and found out that my car was worth $8,831. That was pretty much in line with KBB “good” values which Beepi mentioned that they generally go with. But this didn’t matter, because Beepi offered me $250 over the $9K offer I got from Vroom.
Beepi also had the best website, user experience and more importantly the best search filters of all the sites. Not only could I search by transmission type, but I could also specify how much power I wanted - which was a lot! After being so frustrated with not being able to search with exactly the criteria I desired, Beepi won me over.
They provide gigantic, high resolution pictures of all the cars they’re selling, each with a super detailed analysis of everything that’s wrong with it. All these circled dots below represent every flaw and defect that was found.
Beepi is so detailed with everything that you can probably imagine what the car would be like before ever seeing it. I loved it! Now if only they had a car I really wanted.
As much as I would’ve loved to give Beepi a shot, guess where I ultimately found a car that I had to buy - an individual owner selling their car on Craiglist - good ol’ craigslist! No matter how many millions of dollars these companies obtain to disrupt the used car marketplace, Craigslist will still be a place where all dreams come true. It was too good of a deal to pass up and so I ended up not being able to give Beepi a try...but there’s always next time.
So, can any of these startups be a viable alternative to Carmax, Craigslist, dealers etc.?
They can be. The biggest downside I see with these sites for now is a lack of inventory and listings. Sure, they have a ton of cars that might work for folks who just need transportation, but for us car enthusiasts, who need something specific and special, these sites are still lacking. Not to say that you couldn’t find what you’re looking for if you have the patience, but you might as well find it on Autotrader.
I do like the idea of clicking on something and having it show up at your doorstep and returning it if you don’t like it although I’m not sure how well that works. What does “no questions asked” really mean? I’m sure it’s not as simple as it sounds.
For now, Beepi seems to be the frontrunner in this heated race to disrupt the used car marketplace. In fact, I received this email from Beepi recently..
Good! I’m not surprised at all that Beepi is expanding. The company with the most ridiculous name appears to be the best of them all. Give Beepi a try and let me know how it works for you.
As for me, I’ll be ok with my Craigslist find for now until I get a chance to use Beepi. I can’t wait. Carmax - move over, Beepi is honking pretty loudly!
!!! UNKNOWN CONTENT TYPE !!!
!!!error: Indecipherable SUB-paragraph formatting!!! is about exploring my fascination with cars; I’m always on the lookout for things that interest me in the car world. Like !!!error: Indecipherable SUB-paragraph formatting!!! and follow !!!error: Indecipherable SUB-paragraph formatting!!! !
![]() 07/05/2015 at 11:06 |
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I’ve been looking at Beepi’s website for the past ten minutes or so. I’m impressed with the inventory, and the prices are great, especially considering all of the inspections that the vehicles go through.
And I 100% agree with your stance on Carvana. Since I’m in metro Atlanta, I come across Carvana listings on cars.com whenever I look up certain cars. They’re mostly rental vehicles or New York/New Jersey/Florida cars; very few cars that are actually from Georgia.
![]() 07/05/2015 at 11:37 |
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Awesome - yeah Beepi looks really great. I would’ve definitely gone with them but unfortunately they don’t have a ton of interesting, fast manual transmission cars yet. But I’m sure they will soon.
![]() 07/05/2015 at 13:11 |
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The trouble with all these sites is that I type something like “RX-7,” it gets autocorrected to “RX-8,” and they say “sorry, none of those, but would you like a Honda Pilot?”
![]() 07/05/2015 at 13:39 |
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Hah, yea - their algorithms need some work!
![]() 07/05/2015 at 13:59 |
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CarLotz is a local company and it appears they’ve found quite the niche — I think they’re doing quite well. I see their stickers on the back of cars all around town. I believe they’re expanding pretty rapidly as well (throughout Virginia and into NC). I’m thinking of submitting my resume pretty soon.
![]() 07/05/2015 at 14:18 |
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Yeah, I think locally all these companies are doing well. It will be interesting to see which of these end up being the leaders when they’re nationwide.
![]() 07/05/2015 at 14:19 |
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1) find a broker
2) tell him exactly what you want
3) he finds it at auction, and adds his fee
4) you profit! er, um, not quite profit, but you save! $1500 to $3500 off dealership pricing.
Yes, it’s that simple. For his $950 fee, let him do the work finding the car somewhere in the country at an auction and be the middleman between you and whatever the auction house claims is the car’s condition. And if he’s decent, you get a Carfax as part of the deal.
Even better: the auction houses already do quite a bit of vetting of the car, so the odds of your getting a hurricane flooded car are greaty diminshed, if not eliminated.
It works. No fancy iPhone app, no disrupting startups being obnoxious in your face, and no wasting your time browsing through inadequate interfaces to find the car yourself.
![]() 07/05/2015 at 14:21 |
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Oh, their algorithms don’t need work. Their algorithms are doing exactly what’s planned: throw stuff in your face just in case you might buy it.
realtor.com has the same thing. The filters are less than useless. They don’t give a shit what you want; they know what THEY need, and that’s for you to buy a house, any house. Here’s one; would you like it? No? How about this one? No? How about this one? And none of them has any relation to any filter you “applied”.
When you deal with a human face to face, you can get much more done. Hire a broker and let him do it all. He knows what you want and is your personal filter.
![]() 07/05/2015 at 14:21 |
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Nintendo and The Pokemon company should sue these guys. That company’s a blatant ripoff of their pokemon Carvhana!
![]() 07/05/2015 at 14:21 |
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Thanks for the heads up about these websites! I had no idea they existed. I’m not in the market for a new car yet, but when I am ill definitely check these websites out!
![]() 07/05/2015 at 14:22 |
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Sure thing! I didn’t know about the existence of any of these up until I started searching. By the time you’re ready for a car hopefully these sites will have improved a whole bunch. Looks pretty promising though.
![]() 07/05/2015 at 14:23 |
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Haha
![]() 07/05/2015 at 14:24 |
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When I bought my Fiesta in February, I basically was on a wait list for a 1.0 to come in. When the dealer got one in a color I liked they emailed me their best price (which really was a good price), I emailed a time to check it out. Pulling in to the dealer, to walking out with key (including financing which I didn't need but was basically free money) took 22 minutes. No pressure for extras. I was impressed, and will definitely go back next time. I probably won't even waste time with online shopping next time.
![]() 07/05/2015 at 14:24 |
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Good point. All I really need are filters that are available on Autotrader & Carmax, but like you said, the strategy they’re pursuing now is to show people everything to get people to buy something.
![]() 07/05/2015 at 14:25 |
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Nice..Free money is the best!
![]() 07/05/2015 at 14:25 |
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That “drivetrain” selection option makes me a very happy petrolhead.
Autotrader, if you’re listening...
![]() 07/05/2015 at 14:41 |
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Yeah that's what I am hoping for too!
![]() 07/05/2015 at 14:47 |
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I agree, Autotrader and Carmax win in the filter game. Cars.com should just close up shop.
![]() 07/05/2015 at 15:52 |
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Carvana is an interesting group of people; I’ve spoken with their COO when I interviewing for a job with them. As for why some Harvard/Stanford grads would get into the used car space? One of the co-founders, Ernie, is of DriveTime wealth. His family owns/operates DriveTime making them one of the most, if not the most, wealthy families in Arizona. They are actually building their network off the pre-existing DriveTime infrastructure. With the used car market being a multi-billion dollar industry, they really only a very small market share to be successful. Even as an enthusiast I like their idea even if it runs counter to my test drive everything mantra. They also offer a Carmax-like warranty.
![]() 07/05/2015 at 16:41 |
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It’ll be interesting to see what happens when CarLotz starts recruiting CarMax employees from across town as they try to scale their business. I think it’s only a matter of time.
Maybe CarMax will by CarLotz?
![]() 07/05/2015 at 16:56 |
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Let me know when they have Amazon Prime shipping.
![]() 07/05/2015 at 16:57 |
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You can get a brand new 2015 Toyota RAV4 LE for $22,900 before taxes. Why pay $20,000 for a 1 to 2 year old RAV4 with 40,000 miles?
![]() 07/05/2015 at 17:45 |
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I recommend driveshift.com
![]() 07/05/2015 at 18:08 |
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Oh yea - I did briefly take a look at that - forgot to include it in the writeup! Looked pretty good though.
![]() 07/05/2015 at 18:09 |
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More bells and whistles perhaps?
![]() 07/05/2015 at 18:09 |
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Yeah there will be some level of acquisitions which will reduce the number of competitors.
![]() 07/05/2015 at 18:11 |
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Interesting - having the pre-existing knowledge, background, resources will definitely give Carvana an advantage over the others.
![]() 07/05/2015 at 18:22 |
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I think you might be on to something there. Amazon’s great customer service and low fees are what “made” it. If an online car dealer could do a similar thing to Amazon, they’d be golden.
![]() 07/05/2015 at 20:40 |
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I don’t think any of that really sounds better.
![]() 07/05/2015 at 20:48 |
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Wish US auction was like Japanese Auction, it would probably kill the car game for some.
![]() 07/05/2015 at 20:55 |
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Really? Why’s that?
![]() 07/05/2015 at 21:08 |
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Part of this on every website is also having sellers that use it CORRECTLY.
![]() 07/05/2015 at 23:04 |
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I think I’d rather go to a dealership than go on a website that’s broken that doesn’t have anything I want, and when I get the thing I don’t want and decide I don’t want it, have to get the tow truck to come back to my house.
Also I’m not really sure what $2500 fee you’re talking about when it comes to buying from a dealer.
![]() 07/06/2015 at 01:48 |
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6 companies with 6 god awful names.
How come these super smart business folks can’t come up with a name that doesn’t sound like it belongs in a late night infomercial?
Still, Beepi is intriguing. Have you tried Auto Tempest?
![]() 07/06/2015 at 02:08 |
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NONE .. of this is new. Does no one else remember imotors.com? There were others as well. So a user would crwate a profile, and order cars meeting their specification, including engine, teans, color, etc. Then .. if a user was serious, then they’d make a token, non-refundable deposit of $1500, and the search would bwgin! Not to brag, bit I had a pretty great line up in my fantasy ‘to buy’ garage.
![]() 07/06/2015 at 02:09 |
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10/10 .. would hoon the HELL out of that!
![]() 07/06/2015 at 05:12 |
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No! Haven't heard of auto tempest. Looks pretty cool though!
![]() 07/06/2015 at 05:30 |
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I think because they’re in the startup stage the sites are a little wonky but I’m sure a couple of these companies will be much bigger soon and do a great job as they mature. You never know, you might walk away with a great experience!
![]() 07/06/2015 at 09:08 |
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Yeah, I may be biased (aka. currently employed by) towards Auto Tempest but it really has made searching for cars way, way faster and efficient. This week is a big one for the site, more on this tomorrow.
![]() 07/06/2015 at 09:38 |
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Hey - thanks for the solid, thorough write-up. I actually lead the product team at Carvana. You’re right that there is a lot of good there, and there are many aspects that are still maturing - I’d love to share some things as we roll them out. In the interim, it would be great to know where and how that bum “Loading” message happened so that we can squash that bug. Thanks again - hit me anytime at dan.gill@carvana.com
![]() 07/06/2015 at 10:28 |
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Who physically sells you the vehicle?
![]() 07/06/2015 at 11:04 |
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Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this - 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go to tech tab for work detail.
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![]() 07/06/2015 at 12:18 |
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The broker, who is a licensed car dealer. He can be part of a regular dealership, or he can just be on his own.
He gives you the auction report and pricing, you say OK, then his final sales contract is like five lines long: car (auction) price, his fee, tax, title, registration. Bam. There’s your bottom line.
![]() 07/06/2015 at 13:32 |
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“In general Carlypso appears to be really transparent with their fees; they’ll charge $750 for cars you purchase that are below $20K and $1000 for cars above $20K. They claim that that their fee is much lower to the average $2500 that dealers charge which makes sense since that is their primary competitive advantage”
This doesn’t make sense to me. What “fees” is a dealer charging that adds up to $2500? Unless they’re counting front and back end profit made on a car as a fee, their info is inaccurate.
Are you paying this fee to them on top of the profit that the seller is getting?
![]() 07/06/2015 at 13:57 |
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Beepi has prime shipping :) https://www.beepi.com/BeepiPrime
![]() 07/06/2015 at 20:07 |
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I would think it involves their profit as well - not sure how they came up with the number though. Definitely an estimate from market research, surveys etc.
![]() 07/06/2015 at 20:09 |
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Thanks for the response. I’m not really sure when I got that bug..I think it only happened once though. I’ll shoot you an email.
![]() 07/06/2015 at 20:13 |
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Oh cool! Definitely would like to hear about what you guys are up to. I’ve heard from Beepi, Carvana, Vroom - this is definitely a hot, exciting space so I’m very curious about how all this turns out. There will be a couple companies that make it big and completely change the way we buy and sell used cars so it will be interesting to see who can ultimately make it work.
![]() 07/06/2015 at 20:15 |
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What’s different about these companies is that they’re making it easy enough to where you can just buy cars like you would a laptop online and return it if you don’t like it. Was imotors like that?
![]() 07/07/2015 at 16:10 |
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Sounds great - hit me up anytime.
![]() 07/09/2015 at 18:29 |
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Yes. I believe they did have a fairly generous return policy of 1 month.
The smartphone was still a few years away so they just didn’t have the app. The website was great, and I could check my virtual garage and change colors/options, etc. Glad to see this model coming back - and would love to be able to order a new car .. custom .. from the factory this way. Suppose the true customer of the manufacturer (the dealers) would not like this though.
![]() 07/20/2015 at 10:05 |
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Not sure if you just didn’t apply search filters on carvana, but i’ve found some pretty sweet rides:
https://www.carvana.com/search/2000007…
https://www.carvana.com/search/2000007…
https://www.carvana.com/search/2000007…
![]() 07/20/2015 at 22:14 |
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Yeah, you’re right - there’s some but I think the other sites had a greater variety.
![]() 08/10/2015 at 17:19 |
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No loading results? I think?
![]() 08/10/2015 at 19:49 |
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Wow — 5 minutes from my house.