In a viral video, Russ (@RussFlipsWhips), a popular car salesman on TikTok, shares with viewers that Carvana offered his customers double what he was able to offer them.
Carvana is an online-only, used-car retailer where customers can buy and sell used cars. In his video, Russ shares that he had a customer who had a Tesla they were looking to sell. Russ says while the vehicle was worth around $20,000, it needed about $10,000 worth of work done to it.
The customer, he says, told him, “’There’s some damage on the vehicle, and it’s gonna take about $8,000 to $9,000 to get it fixed. It’s like three months to get the work done.’”
Russ explains, “The Body Shop told us there’s only one Tesla repair facility nearby. So we took all that into account, and were like, ‘Car’s probably worth $10,000 ’cause we got to wait three months to get it fixed. And the Tesla car market is crazy.’”
Carvana’s offer for the Tesla
He tells the customer that he feels comfortable offering them $10,000 for their car. But the customer, he continues, wasn’t satisfied with that number and decided to sell it to Carvana.
“Carvana literally offered them double what we were able to offer them, well aware of the damage. I’m wondering what are they gonna do with this car. How are they gonna put that type of money into it and sell it out of profit?” he questions.
He continues to ponder, “This wasn’t like some quick little touch-up work that you need to do. The car needed some real work done to it.”
@russflipswhips They still bought a car from me lol #carsales #carsalesman #cardealership #carbuying ♬ original sound – RussFlipsWhips
His video has 250,000 views and hundreds of comments. Many viewers also shared potential answers and thoughts in response to Russ’s questions and curiosities.
One viewer shared, “Because Carvana is basically a Buy Here Pay Here. Their finance charges/interest rates make up for their overpayment on some cars.”
Another added, “Carvana makes all their money on finance/fees/warranties. They’ll charge 14% on that Tesla and come out on top.”
One commented, “Carvana will take the car, take it to a state with a high purchase rate for Teslas, and I’m sure they have their own Tesla repair shop at this point.”
How is Carvana going to make a profit?
According to Retail My Ride, “When a retail customer purchases a car through Carvana, the company earns a profit on the sale, along with income from financing and insurance products. Carvana typically buys used cars from wholesalers, auctions, private sellers, and trade-ins, and then reconditions them before listing them for sale on its retail website.”
Also, car buyers are willing to overpay for cars from Carvana due to the no-hassle and convenient service it provides. Since Carvana makes a pretty good profit on cars it sells, it can afford to pay a premium for cars it buys.
Edmunds Senior Manager of Insights Ivan Drury talked to Road & Track about Carvana’s business model.
“The word of mouth marketing is strong; when it comes to automotive, getting a recommendation from someone you know is stronger than reading a review online about the exact same product,” Drury told Road & Track. “And essentially they’re buying the inventory they need to conduct business. They need these cars anyway, but by paying extra they’re getting good feelings and vibes all around. And on the flip side, when they sell the cars, they charge a premium.”
Some viewers chimed in with similar experiences to Russ’ customer, “No idea, but I had a 2024 Terrain, the local dealer offered 22-23k Carvana offered 32k. Somehow the dealer beat them at 33k,” one shared.
The Daily Dot reached out to Russ and Carvana via email.
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