Carvana Slashes Customer Service Costs Through AI Agent

Automotive eCommerce firm Carvana’s continuing rollout of software platforms across its operations contributed to the company’s record second-quarter results, Carvana President, CEO and Chairman Ernie Garcia said during a Wednesday (July 29) earnings call.

During the second quarter, Carvana set records in retail units sold, quarterly Q2 net income and adjusted EBITDA. Retail units sold increased 38% year over year to 197,000, net income totaled $513 million and adjusted EBITDA reached $769 million, according to a Wednesday earnings release.

Carvana achieved its retail unit sales growth during a quarter in which the industry was down about 4 points year over year, Garcia said during the call.

Garcia attributed the company’s gains to its execution and “building the machine” that includes reconditioning the used cars it acquires, optimizing its last-mile logistics for delivering those cars and continually enhancing the customer experience as it sells them.

Carvana is rolling out new technology but is making process improvements even where the technology is not yet in place, Garcia said.

“I think the progress that we’re seeing across the entire business enabled by AI, whether it’s just every product in the business being able to move more quickly or if it’s customer experiences getting better and simpler, I think that’s exceedingly clear,” Garcia said.

Garcia highlighted Carvana’s customer experience agent Sebastian, saying it helped the company reduce its customer care costs by 40% year over year three years ago, another 30% two years ago, another 20% one year ago and another 10% this year.

Carvana’s second-quarter shareholder letter, released Wednesday ,highlighted the company’s management-focused CARLI tools, which are supporting consistent execution at the company’s production facilities as it scales.

Carvana’s entry into the new car business is being well-received by customers, Garcia said, though he said he wouldn’t share much detail until the company gets more data.

It was reported in May that Carvana was making a push into the new vehicle market by acquiring a network of seven Stellantis dealerships. The move enables the company to sell new Chrysler, Jeep, Ram and Dodge vehicles while using the digital playbook from its used car business, which includes no-haggle pricing and remote transactions.

“I think it’s still very early days,” Garcia during the call. “Obviously, the operational implications of new cars are very different than used cars. In used cars, we need to kind of remanufacture those cars. In new cars, you are outsourcing manufacturing to somebody else. It’s a simpler operational problem for us.”