Carvana is one of the largest and the most unique used car dealers in the US. It is unique in the sense that it was one of the first companies in the country to introduce a vending machine for vehicles. You heard us right! Carvana has its very own car vending machine! It is essentially a gargantuan version of a regular vending machine with cars on display instead of snacks.
Carvana was founded over 8 years ago by three budding entrepreneurs, Ernest Garcia III, Ryan Keeton, and Ben Huston. The company has revolutionized the used-car industry over the years, making it one of the top contenders in the trade today. As of 2020, their revenue totaled more than $5.5 billion!
|Status||Public, Independent NYSE: CVNA Russell 1000 Component|
|Industry Sector||Used car retailers|
|Trading Symbol||NYSE: CVNA|
Carvana Competitors Include: CarGurus, Cars.com, AutoTrader, Vroom, CarMax.
Who is Carvana’s Biggest Competitor?
The biggest competitor of Carvana is CarGurus. Similar to Carvana, CarGurus has a major number of its locations concentrated in the Eastern part of the US, with a few sprinkled in the Southern and Southwestern regions. It is an online marketplace for researching used cars in your locality. CarGurus was established in 2006 by Langley Steinert who is also a co-founder of TripAdvisor.
How Carvana Makes Money
The business model of Carvana is similar to any other used-car dealership. It makes money from selling used cars at a higher price than for which it was bought. And by bought, we don’t only mean the price of the actual purchase from the client. It also includes the marketing, logistics, maintenance, upgrade, and inspection costs. Carvana operates in two main industries.
Used Car Industry:
The used car market is considerably huge, and it has been going strong since the very first automotive vehicles were developed. The gist of this industry comprises buying pre-owned cars from the people, making them fit to drive again, and selling them at a reasonably increased price from the purchase amount.
Online Vehicle Marketplace:
Back in the day, customers needed to visit the physical showroom of a used car dealer to buy one. Today, however, you can pick your preferred vehicle from the confines of your house and then visit the physical dealership to bring the car home. This internet venture gives Carvana an edge over other local used car retailers that don’t have an online presence.
CarGurus is older and more experienced than Carvana by about 7 years. Since they have a large experienced founder as well in Langley Steinert (co-founder of TripAdvisor), they entered the market with a bang. Initially, they only dealt in informational blogs about vehicle reviews, but later, due to customer demand, they began advertising on their web platform about possible used cars in the vicinity.
This led them to change their business strategy completely since the used car advertisements provided a better range of profits. Later, they even started dealing in new cars, which also turned out to be a moderately successful venture for them.
Today, CarGurus has a healthy online presence in the US, UK, Canada, Spain, Germany, and Italy. Their revenue ranges near the $150 million mark, which is not much compared to Carvana, but that may only be because they are spread out around the world.
Online Used/New Car Marketplace:
CarGurus is an entirely online marketplace that brings customers and vehicle owners and/or small-time dealers together. They do have physical offices but only for backend stuff. They act as a trustworthy intermediary between buyers and sellers, kind of like an escrow for cars. Since their inception, CarGurus have taken the online vehicle marketplace to another level with their amazing number of successful transactions and their efficiently prompt customer service!
Despite CarGurus’ extensive experience and long-term success, Carvana has already overtaken the company in almost every aspect of vehicle trading. This is because CarGurus solely acts as an intermediary without providing any on-site services, whereas Carvana goes out of its way to help customers purchase the vehicle from the sellers by dealing with the former.
CarMax is, by far, the largest used-car retailer in the US, but we haven’t made it into Carvana’s main competitor simply because it will take them a while to reach the popularity level of CarMax. Founded in 1993, CarMax has been dealing in used cars right from the word go. They have a vast number of cars in their repertoire, and they mostly believe in direct interacting with the customer.
CarMax recently launched their online website as well, but their loyal fanbase typically prefers to visit their nearest CarMax store. And it is not much hassle for the customers since the company has over 224 stores in the US. Their employee number ranges in the 25,000s, which is way more than even the second largest used car dealer in the country.
Used/New Car Dealership:
CarMax mostly deals in used cars by directly interacting with the buyers. However, they also have a few new-car dealerships. Going by the statistics, they sold around 2000 cars per day in 2018, which is a lot considering the sell rate of other used car dealers!
Since Carvana is relatively new in the segment, it will take a while for the company to reach the level of CarMax. CarMax revenue was over $17 billion in 2017, which was more than triple that of Carvana. However, Carvana has been quickly catching up with the used car giant over the years. Due to Carvana’s unique way to handle deals (online marketplace, vending machines, etc.), they have slowly gathered more and more customers, which effectively makes them the favorites to take up CarMax’s mantle in the future.
The Top 9 Carvana Competitors: CarGurus, Cars.com, AutoTrader, Vroom, CarMax, Amazon, eBay, Oodle, CarSoup and Facebook Marketplace. Together, including Carvana, they have greatly impacted the used-car niche. They have more than 1.5 million employees between them, and have contributed over $800 million to the used-car industry.
|Vroom||2013||New York, NY||800|