Carvana offers dealers a third-party marketplace for used cars
Vehicle rental company Hertz, however, revealed in October that it would sell some vehicles through Carvana. And in a letter to shareholders in November, Carvana executives wrote that “vehicles sold by the [Hertz] partnership will be listed on Carvana’s online marketplace and will be realized through our operations.”
It’s unclear who the other market participants are, although some franchise dealer executives, including Martin-Clark, said Carvana offered dealers to participate.
Analysts who cover Carvana said Automotive News that the program could be a way to swell the retailer’s inventory at a time when used vehicles are in high demand and hard to find, given ongoing inventory shortages. Analysts say the market has the potential to grow, but it also carries a risk for the Carvana brand if a transaction with a third party creates problems for consumers.
For dealers, 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 retail without having to make significant investments on their own, some analysts said.
“This makes the most sense for small resellers and small chain stores, such as reseller groups with one to two stores, who don’t have the bandwidth or capacity to invest in an online offering or a digital retail solution,” said Rajat Gupta, equity research analyst covering US auto retailers for JP Morgan. “Listing their car on the Carvana website gives them that exposure to the consumer. “
Yet there are also risks for dealerships, some analysts said, including the fact that listing their inventory on Carvana’s website could send more customer traffic to Carvana than to their own websites or physical lots.