Carvana Operations: Vehicle Flow through the Network

This is a snippet of the transcript, sign up to read more.

Is it Manheim that provides the MMR, which is the average price of a certain car model with a specific mileage?

Yes, the MMR is the average price. However, this can be misleading. If someone pays over 100%, it's not necessarily wrong. The average might include cars in poor condition or with significant damage. If you're focusing on cars in good condition without damage, paying over 100% isn't necessarily wrong.

This is a snippet of the transcript, sign up to read more.

It's cheaper to buy from consumers today because there's a rush on auction inventory. Few players have the capabilities and infrastructure to buy directly from consumers, so they all rush to the auction inventory, which drives up the prices.

Dealers are less likely to sell a car through an auction if its price is below the market value. On the other hand, consumers are more likely to sell because they prefer not to deal with the hassle of selling it on their own or meeting potential buyers. Essentially, they're paying for the convenience of not having to advertise, sell, and take calls from other people, effectively acting as a retailer.

This is a snippet of the transcript, sign up to read more.

So, for simplicity, if we consider a car that can be bought at an auction for $10,000, what would be the auction fees?

Each auction, regionally, may have a different fee schedule. Auction fees for cars increase. However, for the purpose of this project, Carvana and CarMax, being large buyers, have negotiated a flat fee, regardless of the car's location or price. Carvana's auction fees are probably around $300. I would imagine CarMax's fees are less, but I wouldn't be surprised if they change. CarMax buys hundreds of thousands of cars from Manheim auctions every month, and Carvana's volume is also high.

This is a snippet of the transcript, sign up to read more.