Auto Dealer Business Model Changed by COVID19; Surging Online Sales Option Becoming Primary Way to Buy a Vehicle; Dealers Waking Up.

SITUATION:
Non-Dealers & dealers moving potential buyers to online & to their Web sites.
Online companies selling vehicles to people mostly sight unseen.
Traditional dealerships shifting to selling off their websites.
Online offering more capabilities and investing in delivery personnel & services.
Demand for preowned vehicles driving Carvana & other competitor sales.

SIGNIFICANCE:
COVID 19 fall out changing the way people buy car & trucks.
Shift to Internet Retailing from going to showrooms & those dealer visits.
Carvana leads the “caravan” to online sales & management of people’s vehicles.
Carvana had 25% increase in sales in second quarter; Revenue grew 13%.
Company still losing money & don’t expect profit in next 3 years.
Recent surge in online vehicle sales are wake up call for dealers.
Meantime, Carvana’s stock quadrupled since March & lockdowns.
CarMax, Vroom, Shift, & The Ricarts are seeking to compete

SOLUTIONS:
Less people & overhead required for an Online Vehicle Sales model.
No longer a need for big store fronts or even going to the dealership.
Means a dramatic change in traditional dealer offering of vehicle sales & service.
COVID 19 causing dealers to really compete in Pre-owned vehicle Market.
Investors going to online providers as traditional dealer’s market stalls.

STATS:
Carvana in 260 markets; Expects to sell 265,00 cars in 2020;
Wants to sell 2M a year in the future.

SEZ:
“What we needed was an event that would generate the willingness to try something new.”—Ernie Garcia, CEO

SOURCE:
Growth in Online Shopping and Used Cars Lifts Carvana, Attracts Competition – https://www.wsj.com/articles/growth-in-online-shopping-and-used-cars-lifts-carvana-attracts-competition-11597060148

online car sales

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