Carvana Makes Shift Into New Car Business

Used-car giant Carvana is reportedly making a push into the new vehicle market.

As The Wall Street Journal (WSJ) reported Monday (May 18), the company has acquired a network of seven Stellantis dealerships, a move that the report said is disrupting traditional sales models while alarming established franchise owners.

This expansion began with a pilot earlier this year when Carvana purchased a dealership in Casa Grande, Arizona. By last month, that location had become the top-selling Chrysler, Jeep, Ram, and Dodge dealer in the U.S.

Monthly sales surged from roughly 30 to 50 vehicles to 350 under Carvana’s management, according to Stellantis figures shared with dealers and seen by WSJ.

The report said this growth is driven by applying the company’s digital playbook — featuring no-haggle pricing and remote, couch-based transactions — to new-car sales. It’s what attracted customer Joshua Higginbotham of Kansas City.

“I’m sure I could’ve gone into a dealership, got some more gray hairs, and negotiated it down to whatever Carvana had it at or lower, but I’m not going to do that to save $1,000 or even a few thousand dollars,” he told WSJ.

So far, Stellantis is the only carmaker to have allowed Carvana to become a franchised dealer. This move, the report added, has been tough to swallow for traditional dealers who sell Stellanis brands like Dodge and Chrysler.

“Stellantis dealers are in an uproar over this,” said South Florida Jeep-Ram dealer GianMarco Taverna. He added that he doesn’t mind Carvana’s entry into business, provided Stellantis sticks to policies keeping a single dealer from growing too large.

“It is up to us to compete and figure it out,” Taverna said.

Meanwhile, used cars remain Carvana’s bread and butter, with the company recently reporting new quarterly records after it sold 187,393 retail units and took in revenues of $6.4 billion. Those figures marked respective year-over-year increases of 40% and 52%.

The company’s move into the new car business comes as other digital players are entering the realm of physical auto sales.

For example, Hertz recently announced the launch of a dedicated Hertz showroom on eBay’s platform, bringing more than 8,000 “Hertz Certified” vehicle listings to the eCommerce seller’s automotive marketplace.

And Amazon has reportedly begun expanding its automove program as it focuses on forming more partnerships with vehicle sellers.