Carvana

Last updated

Carvana Co.
Company type Public
Industry E-commerce
Founded2012;12 years ago (2012)
Founders
Headquarters
Tempe, Arizona
,
U.S.
Area served
United States
Key people
Ernest Garcia III (chairman & CEO)
Dan Gill (CPO)
ProductsUsed cars
RevenueDecrease2.svg US$10.8 billion (2023)
Increase2.svgUS$450 million (2023)
Total assets Decrease2.svgUS$7.07 billion (2023)
Total equity Increase2.svgUS$243 million (2023)
Number of employees
c. 13,700 (2023)
Website carvana.com
Footnotes /references
[1]

Carvana Co. is an online used car retailer based in Tempe, Arizona. [2] As the fastest growing online used car dealer in the United States, it is known for its glass tower "car vending machines". [3] [4] [5] Carvana was named to the 2021 Fortune 500 list, one of the youngest companies to be added to the list. [6]

Contents

History

Ernest Garcia III, CEO and co-founder of Carvana Ernest Garcia III by Gage Skidmore.jpg
Ernest Garcia III, CEO and co-founder of Carvana

Carvana was founded by Ernest Garcia III, Ryan Keeton and Ben Huston in 2012. The company's initial funding round came from the used car retailer and finance company DriveTime. [7] A year later Carvana opened its first iteration of a car vending machine. In 2015, a fully automated, commemorative coin-operated version of the signature car vending machine opened in Nashville, Tennessee. [4] Carvana currently operates over 30 vehicle vending machines in the US. [8]

In April 2017, the company went public and began trading on the New York Stock Exchange under the symbol CVNA. [9] Also in the same year Carvana acquired rival automotive startup Calypso to enhance vehicle data and analytical tools [10] and in this same year Carvana's co-founders were included in Fortune’s 40 Under 40 list in 2017. [11] The following year Carvana spent $22 million to acquire Mark Cuban-backed Car360 for its smartphone technology for taking vehicle photos with 3D computer vision, machine learning, and augmented reality. [12] [13] In 2022, Carvana acquired ADESA, the nation’s second-largest wholesale auto auction chain, for $2.2 billion to increase its real estate footprint. [14]

In response to the COVID-19 pandemic, Carvana introduced touchless delivery and pick-up in March 2020. [15] In Q2 for that year, the company reported a 25% increase in vehicle sales, as a result of physical dealership sellers being closed as a consequence of the COVID-19 pandemic. Carvana had a gross revenue of $1.12 billion, up 13% for April–June 2020. [16] Throughout that year Carvana sold 244,111 vehicles and posted annual revenue of $5.587 billion, making it the second largest online used-car retailer in the U.S. [17] As of November 2023, Carvana's as-soon-as-next-day delivery was available in 300+ markets nationwide. [18] During the COVID-19 pandemic, Carvana's market value surged when consumers turned to vehicle online marketplaces. [19]

In August 2023, Carvana introduced same-day delivery for customers purchasing or selling a vehicle, [20] the service is currently available in Alabama, [21] Arizona, Indiana, North Carolina, Georgia, Dallas-Fort Worth, and Central Florida. [22]

In May 2022, The Wall Street Journal reported that Carvana had to lay off 12% of its staff (2,500 employees) [23] after falling short of growth expectations. Carvana stock was 90% off its 52-week stock price as interest in the company collapsed. [19] On November 4, 2022, Carvana's stock price dropped around 40% following its poor third-quarter financial results. The total number of used vehicles sold declined by 8% to 102,570. Analysts blamed rising borrowing costs and elevated used-car prices. [24] [25]

In February 2024, CNBC reported Carvana had spent the last 18 months restructuring its operations and debt given concerns about potential bankruptcy. As part of the shift from growth to cost cutting, the company lowered its headcount by more than 4,000 people, removed $1.1 billion of annualized expenses out of operations; released a new proprietary software called Carli that would allow for end-to-end processing of vehicle reconditioning and other tasks that were previously manual; built specific tools for inbound and outbound logistics activities like mapping, route optimization, and driver schedule management; and introducing new tools that employed generative artificial intelligence for some tasks. [26]

Regulatory history

Vehicles not picked up at the vending machine are delivered by a flatbed truck 2019 Isuzu NNR Carvana.jpg
Vehicles not picked up at the vending machine are delivered by a flatbed truck
Outside of the Atlanta car vending machine Carvana Atlanta Vending Machine.jpg
Outside of the Atlanta car vending machine

In August 2021, Carvana's Raleigh vending machine was issued a temporary ban by regulators in North Carolina due to its failure to properly conduct inspections and provide vehicle titles to customers as required by state law. Carvana continued business in Raleigh from other sites in the area and the vending machine was allowed to resume business in January 2022. [27]

For two weeks from May 10, 2022 through May 25, 2022, Illinois suspended Carvana's business license due to customer complaints, effectively banning the company from conducting business in the state. The Office of the Secretary of State of Illinois stated that the company had failed to provide titles to buyers for the vehicles they had purchased within 20 days, as required by Illinois law, and in some cases had illegally issued temporary registrations from other states to customers in Illinois. [28] The state lifted the suspension on May 26, 2022, after imposing strict guidelines on the company's operations. On July 18, 2022, the Secretary of State's office announced that Carvana's suspension was reimposed after finding that company continued to engage in illegal conduct. [29] [30] Paul Breaux, Vice President for Carvana, was charged with multiple misdemeanor and petty offenses due to the Illinois issues. [31] On July 29, 2022, Carvana won a temporary injunction against Illinois to resume business in the state and the Illinois Secretary of State was banned from 'suspending or revoking' the company’s certificates of authority and dealer plates. [32]

Similar issues have been faced in other states, including Pennsylvania, where a class action lawsuit has been filed alleging that the company violated the state's Unfair and Deceptive Trade Practices Act by failing to properly transfer ownership to buyers, a matter in which Carvana denies any liability. [27] [33]

On October 7, 2022, [34] the Michigan Secretary of State suspended the license for the Carvana dealership in Novi for "immediate harm to the public" due to violations of the Michigan Vehicle Code. [35] Before the October 2022 suspension, the state had conducted an investigation in February 2021 that led to Carvana agreeing to be placed under probation in May 2021 and admitting violations. Additional violations occurred during the probation period, and Carvana agreed to a six-month extension of the probation period in February 2022. [35] [36] Despite the suspension, the Novi location continued to operate the following week. [34]

To advance the digital car buying experience and protect vehicle home deliveries, Carvana has championed legislation in Illinois, Iowa and Oregon. [37] [38] [39]

Sponsorships

Carvana is a sponsor of the USL Championship's Phoenix Rising Football Club since 2018, [40] and 7-time NASCAR Cup Series championship driver Jimmie Johnson since 2021. [41]

In December 2023, Carvana announced its kit sponsorship for the Chicago Fire FC Franchise of Major League Soccer (MLS). [42]

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References

  1. ↑ "Carvana Co. 2023 Annual Report (Form 10-K)". U.S. Securities and Exchange Commission. February 22, 2024. Archived from the original on February 23, 2024. Retrieved September 20, 2024.
  2. ↑ Ringle, Hayley (July 7, 2017). "EXCLUSIVE: See inside Carvana's new Tempe headquarters". Phoenix Business Journal. Archived from the original on November 28, 2022. Retrieved November 15, 2021.
  3. ↑ Light, Larry (April 27, 2020). "After The Quarantines, We May All Sell And Buy Used Cars The Carvana Way". Forbes. Archived from the original on November 15, 2021. Retrieved November 15, 2021.
  4. 1 2 Lekach, Sasha (March 21, 2019). "Pick up your used car at Carvana's newest car-sized vending machine". Mashable. Archived from the original on January 27, 2023. Retrieved October 31, 2019.
  5. ↑ Light, Larry (April 27, 2020). "After The Quarantines, We May All Sell And Buy Used Cars The Carvana Way". Forbes. Archived from the original on July 26, 2021. Retrieved July 26, 2021.
  6. ↑ Gull McElroy, Nicole (June 2, 2021). "How did Carvana make it onto the Fortune 500? Unconventional values—and car vending machines". Fortune. Archived from the original on January 9, 2023. Retrieved July 26, 2021.
  7. ↑ "Amendment No 2 to S-1/A". Carvana via SEC Edgar. April 17, 2017. Archived from the original on April 21, 2017. Retrieved December 19, 2017.
  8. ↑ Rodreiguez Ortiz, Omar (August 17, 2023). "A car vending machine? How can buyers use a new gimmicky landmark off I-95 in Hollywood". Miami Herald. Retrieved October 10, 2023.
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  10. ↑ "The Amazon Of Cars Just Made Its First Acquisition". Fortune. Archived from the original on April 16, 2019. Retrieved April 16, 2019.
  11. ↑ "40 Under 40". Fortune. 2017. Archived from the original on October 16, 2023. Retrieved October 10, 2023.
  12. ↑ "Carvana acquires Car360 for $22M to improve its car-buying platform". TechCrunch. April 17, 2018. Archived from the original on January 9, 2023. Retrieved April 16, 2019. Car360 uses 3D computer vision, machine learning and AR tech to improve images taken of vehicles through a smartphone.
  13. ↑ Huddleston, Tom (January 8, 2019). "Mark Cuban says this is Shark Tank's 'No. 1 success story' after start-up sells for $22 million". CNBC. Archived from the original on January 9, 2023. Retrieved September 10, 2019. In April 2018, Carvana acquired Car360, the company Francois, 47, launched in 2015 that uses augmented reality technology and 3-D computer vision to allow people to take 360-degree photos of automobiles with a mobile phone.
  14. ↑ Owusu, Tony (February 25, 2022). "Carvana Steps Out of Digital, to Acquire Adesa Auction House for $2.2B" . Retrieved November 30, 2023.
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  17. ↑ "Q4 2020 Shareholder letter" (PDF). Archived (PDF) from the original on April 24, 2021. Retrieved March 11, 2021.
  18. ↑ "Carvana Launches in Wichita With As-Soon-As-Next Day Vehicle Delivery". Yahoo!. June 30, 2021. Archived from the original on July 26, 2021. Retrieved July 26, 2021.
  19. 1 2 Foldy, Ben (May 10, 2022). "Carvana Plans to Lay Off 12% of Workforce as It Closes Expansion Deal". The Wall Street Journal . Archived from the original on January 9, 2023. Retrieved May 11, 2022.
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  21. ↑ "Revolutionizing Auto Retail: Carvana Launches Same-Day Delivery in Birmingham". automotivenewnow.com. Archived from the original on January 24, 2024. Retrieved January 24, 2024.
  22. ↑ "Carvana Launches Same-Day Delivery in Central Florida". AutobodyNews.com. November 29, 2023. Archived from the original on September 20, 2024. Retrieved November 30, 2023.
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  24. ↑ Lee, Jinjoo (November 4, 2022). "Carvana's Rose-Tinted Windshield Is Dangerous" . The Wall Street Journal . Archived from the original on February 25, 2023. Retrieved September 20, 2024.
  25. ↑ Patrick, Margot (November 4, 2022). "Carvana Stock Falls on Sales Decline" . The Wall Street Journal . Archived from the original on November 21, 2022. Retrieved September 20, 2024.
  26. ↑ Wayland, Michael (February 2, 2024). "A year after bankruptcy concerns, Carvana is leaner and ready for its Wall Street redemption". CNBC. Archived from the original on September 17, 2024. Retrieved February 6, 2024.
  27. 1 2 Hyatt, John (May 21, 2022). "Carvana's 'Chaotic' Zoom Firing Caps Company's Struggles Amid Market Downturn". Forbes. Archived from the original on June 30, 2022. Retrieved June 30, 2022.
  28. ↑ Wallace, Danielle (May 17, 2022). "Carvana banned from doing business in Illinois over registration, title issues". FOXBusiness. Archived from the original on September 20, 2024. Retrieved June 30, 2022.
  29. ↑ "Carvana License Suspended Again In 2 Months In Illinois". NASDAQ. RTTNews. July 20, 2022. Retrieved July 20, 2022.
  30. ↑ Matthews, Brad (July 20, 2022). "Illinois cracks down on Carvana for second time over out-of-state registration permits". The Washington Times. Archived from the original on July 20, 2022. Retrieved July 20, 2022.
  31. ↑ Parker, Lisa; Jones, Tom (September 7, 2022). "Carvana Allowed to Buy, Sell Cars in Illinois While Defending Legal Challenges". WMAQ-TV . Archived from the original on September 20, 2024. Retrieved September 20, 2024.
  32. ↑ Moore, C.J. (August 1, 2022). "Carvana wins temporary injunction against Illinois, can resume business in state for now". Automotive News. Archived from the original on October 16, 2023. Retrieved October 10, 2023.
  33. ↑ Adelman, Jacob (June 24, 2022). "Carvana Sought to Disrupt Auto Sales. It Delivered Undriveable Cars". Barrons. Retrieved June 30, 2022.
  34. 1 2 Craig, Kimberly (October 11, 2022). "Carvana dismisses state's demand to cease operations, calls regulations 'outdated'". WXYZ-TV . Archived from the original on January 13, 2023. Retrieved September 20, 2024.
  35. 1 2 LaReau, Jamie L. (October 10, 2022). "Michigan suspends Novi car dealership Carvana's license citing 'imminent harm' to public". Detroit Free Press .
  36. ↑ Hutchinson, Derick (October 11, 2022). "'Baseless and reckless': Suspended Novi car dealership fires back at Michigan Secretary of State". Click on Detroit . Archived from the original on September 20, 2024. Retrieved September 20, 2024.
  37. ↑ "Carvana-backed vehicle home delivery bill signed into law in Illinois". Automotive Remarketing. August 30, 2023. Archived from the original on June 12, 2024. Retrieved November 30, 2023.
  38. ↑ "Iowa Passes Remote Vehicle Sales Law". Used Car News. May 1, 2023. Archived from the original on September 20, 2024. Retrieved November 30, 2023.
  39. ↑ "HB 3080 Enrolled". Oregon State Legislature. Archived from the original on February 10, 2024. Retrieved November 30, 2023.
  40. ↑ "Phoenix Rising FC reveals 2018 uniforms, announces new sponsor". Arizona Sports. March 11, 2018. Archived from the original on April 16, 2019. Retrieved April 16, 2019.
  41. ↑ "Jimmie Johnson announces Carvana as sponsor for IndyCar venture with Ganassi". NBC Sports. October 21, 2020. Archived from the original on November 1, 2020. Retrieved October 30, 2020.
  42. ↑ Donaldson, Alex (December 13, 2023). "Chicago Fire announce Carvana kit sponsorship, Houston partners with Eleven". SportCal. Archived from the original on September 20, 2024. Retrieved December 15, 2023.
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