The car buying process is typically not a short and sweet scenario. Usually, it involves visiting several dealerships over the course of a few weeks and speaking with countless salespeople who don’t always have the customer’s best interest at heart.
One company that’s hoping to change all of that is looking to file its IPO. Carvana LLC, a U.S.-based used-auto retailer, enhances the car buying process by eliminating the middleman in a unique way. The company uses vending machine towers stacked with cars for customers to choose from. It recently made the move toward IPO filing by approaching investment banks for assistance.
The two financial institutions rumored to be chosen to move the IPO ball forward are Wells Fargo & Co. and Bank of America Corp. The projected valuation for Q1 and Q2 of 2017 is said to reach $2 billion. With the company’s 2015 revenue of $140 million increasing over 100 percent to $350 million in 2016, this projection may not be far off. The company has seen a financial boost over the past year with Ally Financial financing approximately $600 million of Carvana’s customer loans and Carvana seeing a $160 million funding round last August.
Given this new disruption, the fact that shares for car-shopping service TrueCar Inc. have seen a sharp incline, rising 150 percent in the past 12 months, and that U.S. consumer car demand has remained steady for the last two years (around nearly 18 million), shopping for cars may never be the same again.
Last year, Ernie Garcia, founder and CEO of Carvana, told PYMNTS that consumers today are looking for a better way to buy a car. Unfortunately, the traditional process of dealing with a car dealership can come with inefficiencies and lack of transparency that Garcia said shoppers are ready to trade in for something new.
“When you look back at how consumer buying has changed to favor online, on-demand purchases, while still mandating quality and good customer service, we feel confident that now is the time for car buying to undergo a similar revolution,” Garcia explained.
Carvana’s unique way of selling cars through its website and then having customers pick them up via towers in Austin and Dallas, Tex., and Nashville, Tenn., is set to disrupt the overall car buying process. By removing the salesperson out of the equation, Carvana has streamlined car buying and selling operations to better suit the desires of today’s connected consumer.
It’s one thing to take car buying online, but to integrate the vending machine concept into the pickup process is something Garcia said is sure to be a “one-of-a-kind experience that mirrors just how simple and easy we’ve made it to buy a car online.”
Purchasing a vehicle via Carvana typically takes just 30 minutes.
As technology on many levels continues to grow and connects with the retail ecosphere, traditional retailers will see a pull in the opposite direction. As such, we’re likely to see many retail industries evolve over the next five to ten years.
“People are already looking for alternatives to dealerships and will continue to do so, and that’s what Carvana is,” Garcia added.