In December 2014, I bought a Honda Fit right off the lot. It had 23 miles, and I paid $20,814.80, including accessories and an extended warranty. This December, a buzzy startup called Carvana drove away with my car, cutting me a check for $20,905 — leaving me with a profit of $90.20.
Not only that, but Carvana’s offer was $5,000 higher than Vroom, $6,000 higher than TrueCar, and $7,500 higher than CarMax. Carvana’s offer changed day by day, too: the final one I accepted was $1,338 higher than its lowest quote.
I knew I had everything going for me — low mileage, no accidents, and desirable trim at a time when car prices are going through the roof on a model that Honda discontinued. And yet, it sounded ludicrous. Used cars almost never sell for more than their original price, and the company knew next to nothing about me. Yet, Carvana’s algorithm had agreed to pay $20K for my car sight-unseen, even bring a pre-printed check to my door, before any inspection took place. The online quote arrived so fast, I knew a human couldn’t have been involved.
But Carvana didn’t become the fastest-growing digital car dealership in the United States (and the third-fastest company to ever make the Fortune 500 list) by asking pesky humans the price of a car. Instead, it built a computer system, one it trusts so implicitly that no employee was ever going to question what my Honda Fit was worth.
On Tuesday, December 14th, at 4:46PM, the Carvana agent rang to say she was waiting outside, ready to relieve me of my wheels.
I handed over the keys, and she got to work checking the odometer, tapping information into her tablet, taking a few cursory pictures, but she performed no mechanical inspection and asked no questions. Just sign the title, sign away ownership, sign for smog inspection, and here’s your pre-printed check.
Later that week, my bank told me the check looked fine and credited half the balance to my account. The rest cleared the day before Christmas.
Charlie Chesbrough, senior economist at Cox Automotive, doesn’t quite believe it. (Cox Automotive publishes Kelley Blue Book, Autotrader, and runs Manheim Auctions.) “I’ve heard crazy stories, but I haven’t quite heard one with a seven-year-old vehicle selling for more than you originally paid.”
Chesbrough explains that it is a wild time to be in the used car market, though — unlike anything he’s seen in 20 years as an analyst. “The only time we might have seen something similar to this was during World War II when the factories for making vehicles shut down, and they switched over to making airplanes,” he tells me.
For the past 21 months, car prices have been rising at an unprecedented rate. Initially, demand dried up in March 2020 when states started
