Automotive

Carvana’s 3rd-party marketplace program in question

A Carvana spokeswoman previously told Automotive News the company did not have additional information to share on the marketplace program’s status — whether it was canceled or simply paused or whether the circulated memo was accurate and genuine. The spokeswoman, in response to additional questions after Garcia’s comments, said the company had no new updates to share beyond what Garcia said.

But Garcia didn’t offer details about what’s different about the program.

“There’s not a change in underlying beliefs,” Garcia said during the teleconference. “I think there’s an increased focus [on] things that we believe can make a difference in the short-term, relative to the medium-term. And so we’ve chosen to take focus away from that area for now.”

Carvana has offered few public details about how the program operates, including who it has partnered with and how the economics work. Vehicle rental company Hertz did disclose last October that it would sell some vehicles through Carvana. In a November 2021 letter to shareholders, Carvana executives wrote that “vehicles sold through the [Hertz] partnership will be listed on Carvana’s online marketplace and will be fulfilled through our operations.”

Analysts who cover Carvana previously told Automotive News the program could allow Carvana to supplement its inventory in a time when used vehicles were scarcer while at the same time allowing dealers to expand their online retailing reach without major investment.

The program could make sense for smaller dealers trying to reach new buyers, Rajat Gupta, equity research analyst covering U.S. auto retailers for J.P. Morgan, previously told Automotive News.

“Listing their car on Carvana’s website gives them that exposure to the consumer,” he said.

Some analysts said the program posed risks for dealerships. One such risk would be if a dealership listed its inventory on Carvana’s website and ended up generating more customer traffic to Carvana’s offerings rather than the dealership’s own website or physical location.

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