CNBC recently covered Carvana’s new car sales and its move into franchised dealerships. Carvana has purchased seven franchised dealerships that sell Stellantis brands, including Chrysler, Dodge, Jeep, and Ram. One location in Casa Grande, Arizona, has already become Stellantis’ top-selling store in the entire country, moving more than 700 new vehicles last month alone (vs. the ~30-50 vehicles per month, before Carvana acquired it).
Known for its car vending machines and its online used-car model, Carvana also has a nationwide logistics and vehicle processing network with the capacity to recondition approximately 1.5 million vehicles per year, far exceeding its current sales volume of under 600,000 last year. That kind of headroom matters, especially as Carvana expands from used cars and financing into new cars.
Brian Gordon, President of dealer advisor and broker Dave Cantin Group, explained what likely drove the move:
“After stabilizing their core business, I think they realized, by looking at the franchise model, that there was a significant amount of revenue and gross profit opportunity that their business model didn’t even contemplate.”
They saw the opportunity sitting in new car sales, parts & service, and decided to go after it.
The franchised dealership system isn’t going away. New car sales are heavily regulated state by state, and dealers must follow strict rules from automakers on everything from showroom layouts to service requirements. These aren’t small hurdles.
