Revenue Recognition

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Disaggregation of Revenue

The significant majority of the Company’s revenue is derived from contracts with customers related to the sales of vehicles. In the following tables, revenue is disaggregated by major lines of goods and services and timing of transfer of goods and services. The Company has determined that these categories depict how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

The tables below include disaggregated revenue under ASC 606 (Revenue from Contracts with Customers):

	Three Months Ended March 31, 2022
	Vehicle Sales		Fleet Management		Total
Retail vehicle sales	$	50,588	$	—	$	50,588
Wholesale vehicle sales	8,575		—		8,575
Finance and insurance, net	$	3,705	$	—	$	3,705
Lease income, net	—		146		146
Total Revenues	$	62,868	$	146	$	63,014

	Three Months Ended March 31, 2021
	Vehicle Sales		Fleet Management		Total
Retail vehicle sales	$	50,383	$	—	$	50,383
Wholesale vehicle sales	4,568		—		4,568
Finance and insurance, net	$	1,554	$	—	$	1,554
Lease income, net	—		107		107
Total Revenues	$	56,505	$	107	$	56,612

The following table summarizes revenues and cost of sales for retail and wholesale vehicle sales for the periods ended:

	Three Months Ended March 31,
	2022		2021
Retail vehicles:
Retail vehicle sales	$	50,588	$	50,383
Retail vehicle cost of sales	52,415		48,917
Gross Profit – Retail Vehicles	$	(1,827)	$	1,466
Wholesale vehicles:
Wholesale vehicle sales	$	8,575	$	4,568
Wholesale vehicle cost of sales	8,521		5,687
Gross Profit – Wholesale Vehicles	$	54	$	(1,119)

Retail Vehicle Sales

The Company sells used vehicles to retail customers through its 22 retail hub locations. The transaction price for used vehicles is a fixed amount as set forth in the customer contract, and the revenue recognized by the Company is inclusive of the agreed upon transaction price and any service fees. Customers frequently trade-in their existing vehicle to apply toward the transaction price of a used vehicle. Trade-in vehicles represent noncash consideration, which the Company measures at estimated fair value of the vehicle received on the trade. The Company satisfies its performance obligation and recognizes revenue for used vehicle sales at a point in time when the title to the vehicle passes to the customer, at which point the customer controls the vehicle.

The Company receives payment for used vehicle sales directly from the customer at the time of sale or from third-party financial institutions within a short period of time following the sale if the customer obtains financing.

The Company’s exchange policy allows customers to initiate an exchange of a vehicle during the first three days or 500 miles after delivery, whichever comes first. An exchange reserve is immaterial based on the Company’s historical activity.

Wholesale Vehicle Sales

Vehicles that do not meet the Company’s standards for retail vehicle sales, vehicles that did not sell through the retail channel within a reasonable period of time and vehicles that the Company determines offer greater financial benefit through the wholesale channel are sold through various wholesale methods. The Company satisfies its performance obligation and recognizes revenue for wholesale vehicle sales when the vehicle is sold at auction or directly to a wholesaler and title to the vehicle passes to the next owner.

Finance and Insurance, net

The Company provides customers with options for financing, insurance and extended warranties. Certain warranties are serviced by a company owned by a major stockholder. All other services are provided by third-party vendors, and the Company has agreements with each of these vendors giving the Company the right to offer such services.

When a customer selects a service from these third-party vendors, the Company earns a commission based on the actual price paid or financed. The Company concluded that it is an agent for these transactions because it does not control the products before they are transferred to the customer. Accordingly, the Company recognizes finance and insurance revenue at the point in time when the customer enters into the contract.