Carvana faces new pressure from GM (General Motors) as they have announced that they will be entering the used car marketplace. The used car marketplace has grown over the last couple of years.
It’s safe to say that it is now seen as a big enough pie for GM to step in and take market share from participants such as Carvana.
The used car market has potential, it has puzzled analysts as to why GM never entered earlier. Yearly around 40 million used car vehicles are sold and that is twice the number of new cars and trucks. The entire process of selling a used car doesn’t involve automakers at all.
Carvana has enjoyed a successful 2021 at one point their stock was trading at $370 per share. As the world faces supply chain issues, they swooped in those niche markets and offer vehicles sometimes above the normal market price due to lack of supply. In 2020 they made roughly $5.587 billion in revenue.
Despite their success, they have lost more than half their valuation over the last year. Currently, they are trading at $163 per share a far cry from their high. Along with their troubles in the stock market, competitors are now waking up to the marketplace and want a piece of the action.
GM is planning to launch an app called CarBravo, with their huge customer base they can be able to scale pretty easily. GM officials said that the company currently has over 400,000 used cars in stock.
As competition mounts for Carvanna it will be interesting to see how they are going to handle this coupled with their stock market woes.
