Carvana Is In Trouble Again And There's No Easy Resolution

It goes without saying that the automotive industry as a whole is going through some seriously trying times. Major manufacturers have been battling a global chip shortage and ongoing supply chain issues. Brands such as Tesla are having a hard time delivering popular models such as the Model S and Model Xon time, and the waiting list for a new Ford Bronco spans years. These issues have a trickle-down effect on the secondhand car market, which has seen a surge in prices, and while some businesses capitalize on the beater gold rush, others are struggling to keep up. Carvana, which is famous for its massive car vending machines, is once again falling on hard times. The company, which specializes in buying and selling second-hand cars, is failing to deliver license plates to its customers, and it's becoming a big issue.

Carvana customers have been complaining that the company is failing to produce permanent registration paperwork or metal tags, and it has come to a point where certain states have issued the company with stop-sale orders and significant fines. A letter issued to Carvana shareholders in Q3 shed some light on the issue.

"Our explosive growth in buying cars from customers over the last two quarters created significant operational constraints in our system," it said. "Buying more cars from customers leads to more last-mile pickups, more customer care interactions, and more complex title processing requirements, which in turn leads to more complex registration processing. Our teams are responding by enhancing our systems and processes to adapt to this rapid change."

According to Houston's KPRC Channel 2, a 22-year-old woman from Texas has been waiting 455 days for tags on a 2018 Hyundai Elantra she bought back in 2020. Texas state law requires the owner to submit registration paperwork within 30 to 45 days. Essentially, the car has become undrivable on public roads. Carvana's expansion into new markets was halted when the COVID-19 pandemic hit and has caused major backlogs for the business. No one likes bureaucracy, but the law's the law, and Carvana is dropping the ball big time. If this continues, we could soon see irate customers taking legal action.