Categories
Insights

Getting into Inventory at CVNA and VRM

Our CE Web data correlates very well to auto sales metrics for companies like Carvana (CVNA) and Vroom (VRM).  But what happens when strong sales aren’t enough?  Vroom stock took a hit last week when profits were down, with our inventory data providing a key explanation why.

Though both CVNA and VRM have had strong sales boosted by a pandemic-driven shift away from mass transit, CNVA is much better at turning that inventory.  Since almost the beginning of the pandemic, VRM has shown an escalating average number of days inventory stays on its site, topping out at an average of almost 80 days at the end of 2020.  Although at the beginning of 2020 CVNA was holding inventory longer, over the summer this dropped to only about a month on the site before sale.  Although CVNA had the same average holding increase in the winter when VRM did, this represented a y/y decrease of 15% in November and an increase of only 1% in December vs. a 44% increase in November and 77% increase in December for VRM.

Days on Site

Inventory issues have only been exacerbated by recent inclement weather that has delayed shipments.  For the week ending February 20, CVNA’s ratio of sales to prior week pending purchases fell below 0.7 for the first time this year after a winter storm devastated parts of the South.  VRM’s ratio of sales to prior week pending purchases fell below 0.4 in the same week.

Pending vs. Sold

Note: Pending purchases usually realized in Unit Sales the week following