The online used car seller's stock has lost more than 98% of its value this year, and yet Carvana had the wind in its sails at the end of 2021, The Street reported. The company was Amazon's counterpart in the automotive industry. It had become the place where consumers went to buy or sell a used vehicle. The company's business model was in perfect symbiosis with an economy that had moved online due to the restrictions to limit the spread of the pandemic. The sector of used cars had a bad reputation, but Carvana vowed to change it with its innovative business model, in the hope that it would win the trust of customers who are looking for a used vehicle. The Tempe, Ariz.-based company says it has found the formula that will make buying a second-hand car a satisfying transaction for its customers. Carvana wants to be the one-stop-shop for used cars. In fact, the company offers its customers a turnkey purchasing solution: it takes care of the inspection of the cars it buys for resale, repairs if necessary, financing and selling. Each vehicle can be viewed under a glass thanks to patented 360-degree imaging technology. Using one of these vending machines, the customer can easily pick up their new car while dropping off the old one. Alternatively, Carvana will deliver the purchased vehicles directly to the consumers. Each vehicle comes with a seven-day return policy. This model gave Carvana an advantage, because the U.S. used car market is extremely fragmented. The problem is that the company didn't seem to have anticipated headwinds: The downturn in the used car market, in particular, a possible recession and a sudden rise in interest rates, which would make car loan financing expensive, represent a normalization of the new market.
