Carvana is changing the way people buy cars. The company is disrupting markets across the country, and Houston may be the next big market to be affected. Local dealers have long dominated the market, including companies like Houston Direct Auto and Texas Direct Auto.
Edmunds has remained the largest portal for people searching for cars, including used cars.
But Carvana is also disrupting Edmunds.
Why Carvana is Making an Impact
Carvana is different. Texas has 262 billion miles traveled each year, and 99% of those drivers purchased their vehicles at dealership lots. Carvana sold over 44,000 units in the second-quarter, rising 95% year-over-year.
The difference is that you don’t go into a dealership.
You skip over dealership fees and use Carvana’s car vending machine. The e-commerce platform found that 81% of consumers do not like the car buying process.
Consumers use the online portal, and they can choose one of two experiences:
- Home delivery
- Car vending machine
If you choose the vending machine experience, you’ll go to a glass building that holds over twenty vehicles. There’s no long lines or pushy salesmen trying to push you into a vehicle that you can’t afford.
Buyers are given a large coin, place it into a receptacle and the vehicle is dispensed.
The buying process is faster and more efficient than the traditional buying experience. It’s the new way to buy a vehicle, but it’s more costly to start a new location because each vending machine costs millions of dollars.
Focused on the Customer Experience
When consumers use Carvana, 95% claim that they would recommend the service to a friend. The experience is hassle-free, with no salesmen there to push you into a sale. You also get to skip the long financing process.
Direct-to-consumer, you get to purchase a vehicle that passes the savings to the consumer.
There are no hidden fees and lower overall costs.
Inventory on the platform has over 20,000+ vehicles compared to just 10 – 100 at a typical dealership.
Car acquisition is also much more refined. Used cars in dealer lots are not strategically picked. An owner sells or trades in their vehicles, and the vehicle is placed in the lot for sale. Carvana uses its own, in-house acquisition system.
The system considers the needs of the consumer so that the holding inventory is geared to the region’s demographic. Car screening, forecast and historical data are all used to help the consumer find the right vehicle.
Consumers can purchase vehicles in ten minutes, and the company offers their own in-house financing, too.
If you purchase a vehicle, you have seven days to be able to return the vehicle.
Houston’s dealerships are going to have to offer a better, faster purchasing process without the pushy sales tactics of the past. Carvana’s presence is just starting to pick up after years of uncertainty. The company had difficulty making profit due to the large upfront startup costs.
Carvana has been growing exponentially, with the company hoping to cover up to 145 markets by the end of the year. Total US population coverage is around 67%.