Carvana, the online retailer that revolutionized the used-car market, is making a bold move into new vehicle sales by acquiring seven franchised dealerships. Experts in the industry suggest this could significantly change the traditional auto retail landscape in the U.S.
Since last year, Carvana has welcomed seven dealerships that mainly sell Chrysler, Dodge, Jeep, and Ram vehicles from Stellantis. Notably, one of these locations in Casa Grande,
Arizona, has quickly become Stellantis' highest-volume dealership in the country, selling over 700 new vehicles in just one monthin impressive jump from the usual 30 to 50 monthly sales prior to the acquisition.
This expansion allows Carvana access to the profitable new-vehicle market while bolstering its used-car business as well. Being a franchised dealer means the company can participate in dealer-only auctions and can more easily obtain trade-in vehicles from new-car buyers, opening up new inventory channels for its extensive used-car platform nationwide.
Industry analysts believe this move could be game-changing. With Carvana's digital-first approach, extensive logistics network, and state-of-the-art vehicle processing facilities, it might have an edge over traditional dealership groups that still depend heavily on local operations and physical showrooms.
Additionally, stepping into franchised retail gives Carvana broader revenue possibilities beyond just selling and financing used vehicles. New-car sales, parts and service operations, and customer maintenance programs could eventually play a significant role in the company's growth.
Nevertheless, there are hurdles to overcome. New-car sales are tightly regulated, differ by state, and require adherence to automaker franchise agreements.
There are also lingering questions about how Carvana will manage vehicle servicing and customer support after sales, which have been key to dealership profitability and keeping customers coming back.Carvana Expands Into New-Car Sales, Raising Questions About Future Of U.S. Dealership Model
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