Three years ago, Carvana’s future looked short and bleak. Sales tanked, layoffs had to be made, and the company’s stock price threw itself from a $376 peak to land at seven bucks. Somehow, the online used car retailer rescued itself from the brink over the past two years, and last Friday it announced it’d be stepping into a new line of work, operating a Chrysler/Dodge/Jeep/Ram franchise just south of Tempe, Arizona.
Why venture into new car sales? And why with Stellantis, which is not exactly in the strongest place these days? According to Automotive News, Carvana’s response is, “Why not?”
“We’re always experimenting, and this is a small test in a single market,” Carvana said in a statement. “We are excited to join the Stellantis network and our focus in this test will be learning how to provide great customer experiences at a franchise dealership—we don’t expect it to have any noticeable impact to our results for the foreseeable future.”
Even a single-market test like this would’ve been unthinkable for Carvana just a short time ago. But 2024 happened to be a pivotal year for the company, as it enjoyed 33% sales growth after months of restructuring and cost-cutting. Shrewd moves paying off—depending on who you ask, anyway. Earlier this year, Hindenburg Research released a report that called Carvana a “grift for the ages.” That’s the same firm that exposed fraud at Nikola and Lordstown Motors, both of which later went bankrupt.
Carvana may not be in the EV game, but its history dates back similarly far. The business has been around since 2013, introducing itself to the world with its signature car vending machines. Today, there are 39 of those car towers. Carvana also celebrated its 4-millionth vehicle transaction in October.
So, is this truly just a test, or a hint toward something more? Other companies in Carvana’s space have pivoted from their initial strategies. In fact, CarMax did the same thing as AN pointed out in its piece—except in reverse. Well before shifting its focus to used vehicles, CarMax started life operating a Chrysler store in the mid-’90s. By 2021, all of its new-car dealerships were gone. As for Carvana taking over this Arizona Stellantis franchise, it probably has less to do with following its rival’s footsteps and more with location. Also, I dunno—maybe it was cheap.
Carvana didn’t disclose its transaction price for the Jerry Seiner Chrysler/Dodge/Jeep/Ram dealership, but the location also happens to be the dealership group’s only Stellantis store. Jerry Seiner Dealerships has more than a dozen retailers spread throughout Arizona, Utah, and Nevada. However, its Casa Grande location is just 45 miles south of Carvana HQ in Tempe. Carvana will reopen the dealership on Monday as Casa Grande Chrysler/Dodge/Jeep/Ram, and all 41 employees have been retained.
Other than dipping a toe into the new-car sales market, Carvana’s intentions for the rest of this “experiment” are anyone’s guess. Perhaps it’ll install a token-operated vending machine for new Dodge Charger EVs and Jeep Cherokees, too? Although it’s fortunate that nobody’s lost their jobs, the elephant in the showroom is what staffing changes Carvana may make going forward. The very top of the company’s About Us page reads “Get in the car without the car salesman”—in caps. I wonder how the Casa Grande team would feel about that.
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