Carvana Makes Waves in Used Car Sales

February 21, 2014

We’re living in an age of unprecedented innovation. There’s no shortage of people who look around, see a better way of doing something, then make a business of doing it better. The folks at Carvana, based in Phoenix, AZ, are doing just that, but in an unlikely industry: used car sales. How does one innovate in what has long been a largely unchanged industry? Carvana found an answer that, really, should have been quite obvious.

Buy a Car Online and Have it Delivered—in 48 Hours

car lotAmericans are being conditioned to expect instant gratification in just about all facets of our lives. These days, there’s not much that we wait around for—and yet car buying has remained a tedious, lengthy, and generally very slow process. How often have you gone to a dealership to buy a car and wasted your entire day? The folks at Carvana saw this as an opportunity to improve a process that was long overdue for change.

Carvana’s premise is simple: Omit the salesperson, forget the car lot. Let consumers buy their used cars online at a fixed price, then have the car delivered to them in the next 48 hours. It was such a good idea that the company secured backing from DriveTime Automobile Group, a used car sales company whose focus is on consumers with less than ideal credit.

What Should I Expect if I Buy from Carvana?

Carvana LogoLogging on to the Carvana website, you’ll see right at the top bar that they have limited stock. At the time of writing this, their inventory shows 286 cars for sale. That’s not bad if you imagine their website as a virtual car lot. That’s something like walking onto a Carmax lot. Of course, you have to take into consideration that unlike a real-life car lot, Carvana attracts used car shoppers from all over the U.S., so competition for vehicles is steep. Of course, we fully expect that as demand increases, so will their inventory. Another thing visitors to the site might notice is that Carvana also offers financing.

What We Found About Carvana

Carvana HomepageWhen we first heard about Carvana we were a bit skeptical. We definitely see the pros in not having to haggle with salespeople and we understand that if you don’t have to maintain the typical 5 to 50 car lots, your costs go down (and ideally the savings are passed on to customers, as we see with Carvana). There was still something a little sketchy about buying a car online.  Upon closer inspection, we were surprised at what we found.

The Pros of Carvana:

  • Car selection was very wide—brands ranged from BMW to Chrysler to Honda. Model years ranged from 2007 to 2013 with the majority of inventory being 2013 model years.
  • Car quality appears exceptional. Carvana uses Experian equivalent of the popular Carfax, called CarCheck, which uses Vehicle Identification Number (VIN) info to track the vehicle’shistory. Carvana does not sell cars that have been in an accident. There’s even a 100-day guarantee on your vehicle.
  • There’s a 7 day “No Questions Asked” money back guarantee on your purchase. So if it shows up and isn’t what you expected, for whatever reason, you can get your money back.
  • The vehicles are reconditioned to look new. They’re washed, waxed, shampooed, etc.
  • Your purchase includes a free oil change and your car’s Owner’s Manual (something not all used cars come with, but is usually helpful to have).
  • 360 degree photos of the actually vehicle are available for all cars on the site so you don’t need to check the car out in person.

The Cons of Carvana:

  • Delivery of your car is only free if you live within 75 miles of their (currently) only physical location, near Atlanta, GA. Outside of that, it’s going to cost you $199 for up to 250 miles and as much as $1,000 for coast to coast shipment.
  • No haggling isn’t always a good thing. While the prices here are definitely lower than sticker prices at traditional used car dealerships, you could still potentially find a better deal at a local dealer if you’re willing to give up some of the extras Carvana offers and you happen to be really good at negotiating car prices. (We’re really good at negotiating.)

Who Gets the Most Benefit from Carvana?

Carvana isn’t for everyone. For those of us that prefer to kick the tires, take it for a spin, and check under the seats, this type of car buying experience may be too much of a leap of faith. For most folks who want to buy a car as painlessly and as effortlessly as they might buy consumer electronics or books (we still read those, right?), this is an ideal set up and to be perfectly honest, these people are still getting a really good price on a high-quality used car.

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