Carvana Is Winning. The Dealership Model Is Breaking.
About this episode
Automotive consulting legend Tom Stuker joins the hosts to dissect Carvana's mind-boggling sales record at their Casa Grande, Arizona location, where they recently moved nearly 1,000 vehicles in a single month. The team debates whether these numbers represent genuine market conquest, fleet deals with Hertz, or even shady cross-border transactions. They also dive into the logistical nightmare of managing service technicians and pre-delivery inspections for such massive volume, alongside a critical look at Hertz's recent marketing missteps.
The conversation delves into Tom Stuker's career background, the birth of the BDC, and Carvana's record-breaking sales. It also explores the impact of social media marketing and brand perception on Carvana's success, as well as the questions raised about market dynamics and inventory management. The conversation delves into the investigation of off-site locations, the impact of FTC letters on transparency, the issue of addendums and pricing, the broken retail model, incompetence in dealerships, the role of salespeople and managers, and improving dealership practices. Key takeaways include the influence of market-driven pricing and the importance of customer relationships in the automotive industry.
Takeaways
- Carvana's record-breaking sales raise questions about market dynamics and inventory management.
- The impact of social media marketing and brand perception on Carvana's success. Market-driven pricing
- Importance of customer relationships
Chapters
- 00:00 Market Impact and Inventory Management
- 24:57 Investigating Off-Site Locations
- 33:15 The Broken Retail Model
- 40:55 The Role of Salespeople and Managers
- 47:58 Improving Dealership Practices
Tom Stuker
"We've got a legendary guest, someone that's a living legend here in Automotive, Mr. Tom Stucher. Thank you for doing this and jumping on with Zach and myself."
A famous car dealership consultant who invented the modern call-center style department (BDC) that dealerships use to call customers and set appointments.
An automotive retail legend and consultant who pioneered the Business Development Center (BDC) concept in dealerships during the 1980s. He is widely known for his training programs focusing on proactive sales, phone skills, and customer relationship management.
BDC
"For those who don't know it, yes, I'm the old fart that started the BDC back in the 80s."
A call center inside a car dealership where employees spend their day calling, emailing, or texting potential buyers to get them to make an appointment.
Business Development Center. A specialized department within a car dealership dedicated to handling inbound internet leads, outbound prospecting, and scheduling sales or service appointments.
Carvana
"Carvana just broke their all time record. Actually, they sold nine hundred and ninety eight cars at their one Phoenix location, Casa Grande."
An online company where you can buy used cars from your computer or phone, famous for building giant glass towers that look like vending machines for cars.
An online used car retailer known for its multi-story car vending machines and home delivery model. The company disrupted the traditional retail model by acquiring physical franchise dealerships to sell new cars online at massive volumes.
conquest sale
"So where the hell are all these sales coming from? I mean either have to be conquest and have that many people given up Chevy and Ford for a Dodge these days."
When a car company convinces someone who usually buys a rival brand's car (like a Ford) to buy their car (like a Dodge) instead.
A sales transaction where a dealership or manufacturer successfully convinces a customer who currently owns a competing brand's vehicle to switch to their brand.
PDI
"This is an area where you want to talk about a irrelevant or pointless PDI, it would be on a Dodge, right?"
A final inspection a mechanic does on a brand-new car right after it arrives from the factory to make sure everything works perfectly before the buyer drives it home.
Pre-Delivery Inspection. A systematic check performed by a dealership technician on a new vehicle before it is delivered to a customer, ensuring all safety, cosmetic, and mechanical systems meet factory standards.
Toyota RAV4
"because of F one fifty and Rav four shortages."
A highly popular and fuel-efficient compact SUV made by Toyota that is famous for its reliability and hybrid options.
A compact crossover SUV featuring a highly efficient inline-four engine, with extremely popular hybrid and plug-in hybrid (Prime) variants. It is a global sales powerhouse, widely credited with pioneering the car-based crossover SUV market.
Ford F-150
"because of F one fifty and Rav four shortages."
America's most popular pickup truck, built by Ford, used for everything from heavy work to daily family driving.
A full-size pickup truck offered with a variety of powertrains, including EcoBoost V6s, a traditional V8, and hybrid options. It has been the best-selling vehicle in the United States for decades, renowned for its towing capability and utility.
Honda CR-V
"But I will tell you, Honda just recently, and I'm just gonna jump to this quick article, Honda just recently announced the CRV took leadership in the US for the first time."
A very popular, reliable, and family-friendly compact SUV made by Honda that is known for being easy to drive and highly practical.
A highly popular compact crossover SUV powered by a fuel-efficient inline-four engine, available in both traditional gasoline and hybrid configurations. It is celebrated as one of the best-selling and most reliable family vehicles in North America.
turn and earn
"And I don't know how they they did it. I th that to me is gonna probably raise more questions than anything because it's a t it's supposed to be a turn and earn type of scenario."
A rule where car manufacturers reward dealerships that sell cars quickly by sending them even more cars to sell.
An inventory allocation system used by manufacturers where a dealership's future supply of vehicles is directly determined by how quickly they sell (turn) their current inventory. Faster sales velocity leads to higher future allocations.
dealer addendum
"so these five thousand dollar addendums. I mean, they've gone a kinda gotten rampant here in Texas these last couple of years."
An extra sticker the dealership puts on a new car's window to charge you more money for things like window tinting, paint protection, or just a 'market markup.'
A supplemental window sticker placed next to the official factory Monroney label, detailing dealer-installed accessories, warranties, or market adjustments that increase the vehicle's final price.
Toyota Camry
"back in the mid eighties, I think it was when Toyota and Honda ruled with the Camry and the Accord and both companies were really from a retail standpoint, were working on two and three day inventories."
A highly reliable and comfortable mid-size four-door car made by Toyota that is one of the best-selling passenger cars of all time.
A mid-size sedan powered by fuel-efficient four-cylinder or V6 engines, renowned for its legendary reliability and comfortable ride. It has long served as the benchmark for the mid-size family car segment in North America.
Honda Accord
"back in the mid eighties, I think it was when Toyota and Honda ruled with the Camry and the Accord and both companies were really from a retail standpoint, were working on two and three day inventories."
A popular, sporty, and reliable mid-size family car made by Honda.
A mid-size sedan celebrated for its engaging driving dynamics, spacious interior, and refined turbocharged or hybrid powertrains. It is a perennial favorite among automotive journalists and buyers seeking a blend of practicality and sportiness.
Chevrolet Corvette
"...ecialty cars still exist and have, whether it's a Corvette or whatever specialty car. So long as it's transp..."
The Chevrolet Corvette is a two-seat sports car made by Chevrolet. It is designed for fast driving, featuring a sleek body and an engine positioned behind the passenger cabin rather than in the front.
The Chevrolet Corvette is an iconic American sports car, currently in its eighth generation (C8), which transitioned to a mid-engine layout to maximize performance and handling. It is celebrated for delivering supercar-level acceleration and track capability while remaining relatively accessible compared to other high-end sports cars.
G-Class G Wagons
"Mercedes-Benz, you know, we had G Wagons fifty K over, a hundred K over, depending on the the time of the market."
A boxy, very expensive luxury SUV made by Mercedes-Benz that is popular with celebrities but also incredibly tough off-road.
A luxury body-on-frame SUV powered by a twin-turbocharged V8 engine. Originally developed as a military vehicle, it has evolved into a high-status symbol combining extreme off-road capability with opulent luxury.
doc fee
"and then these dock fees, you know, Florida's pretty, you know, up there in dock fees. I see I've seen some for like twelve hundred bucks."
An extra fee a dealership charges you to handle the paperwork for buying the car.
Documentation fee. A charge levied by dealerships to cover the administrative costs of processing a vehicle sale, including title, registration, and contract paperwork. These fees vary widely by state, with some states capping them and others allowing unlimited charges.
Ram TRX
"post the other day with a Ram TRX 40,000 over sticker and it took every fiber of my being not to call that guy up and just say, screw you, you are everything that's wrong with the industry."
An incredibly fast, loud, and powerful off-road pickup truck with a supercharged V8 engine designed to jump over sand dunes.
A high-performance, widebody pickup truck powered by a supercharged 6.2-liter HEMI V8 engine producing 702 horsepower. Designed to dominate off-road terrain at high speeds, it features a specialized Bilstein active damping suspension system.
Dodge Ram
"...what it is. Zach Fritz: post the other day with a Ram TRX 40,000 over sticker and it took every fiber o..."
The Ram is a large pickup truck made for towing, hauling, and daily driving. The TRX version is a specialized, high-power model built for driving quickly over rough off-road terrain.
The Ram pickup (historically known as the Dodge Ram) is a popular line of full-size trucks, with the TRX variant representing a specialized, high-performance off-road model. Equipped with a supercharged V8 engine and a reinforced suspension, the TRX is designed for high-speed desert racing and heavy-duty capability.
Porsche At911
"Cause I can tell right now on a Porsche at 911, they were getting like 25 grand over on a used car at auction."
A legendary German sports car with its engine in the very back, famous for being both a racetrack weapon and a car you can drive to work every day.
An iconic sports car defined by its rear-mounted flat-six engine and distinctive silhouette. Spanning over six decades of evolution, it is globally revered for its precise handling, everyday usability, and motorsport pedigree.
Honda CRX
"... i I've got a client that that that has that that CRX or whatever it is that's coming in ⁓ in the fall ..."
The Honda CRX is a small, two-seat hatchback car that Honda sold during the 1980s and early 1990s. It is known for being very light, easy on gas, and simple to drive.
The Honda CRX is a classic front-wheel-drive sport compact hatchback produced from 1983 to 1991. It is highly regarded by enthusiasts for its extremely lightweight design, outstanding fuel efficiency, and nimble, go-kart-like handling.
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