Vehicle rental company Hertz, however, disclosed in October that it will sell some vehicles through Carvana. And in a letter to shareholders in November, 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.”
It’s not clear who other marketplace participants are, though some franchised dealership leaders, including Martin-Clark, said Carvana has been pitching dealers to participate.
Analysts who cover Carvana told Automotive News that the program could be a way to pump up the retailer’s inventory at a time when used vehicles are in high demand and hard to come by, given ongoing inventory shortages. The marketplace has the potential to grow, analysts say, but it also comes with risk to Carvana’s brand if a third-party transaction creates hiccups for consumers.
For dealerships, partnering with a company such as Carvana that has a well-developed digital infrastructure could be a way to participate in the expansion of online retailing without having to make sizable investments on their own, some analysts said.
“This makes the most sense for the smaller dealers and the smaller store chains, like the one- to two-store-count dealer groups, that do not have the bandwidth or the capacity to invest in an online offering or a digital retailing solution,” said Rajat Gupta, equity research analyst covering U.S. auto retailers for J.P. Morgan. “Listing their car on Carvana’s website gives them that exposure to the consumer.”
Yet there are risks for dealerships, too, some analysts said, including that listing their inventory on Carvana’s website could send more customer traffic to Carvana than to their own websites or physical lots.
