Carvana, long the dominator of the U.S. used-car market, is quietly expanding into the new-vehicle space by acquiring seven Stellantis-focused franchises since last year. The moves come as the company aims to diversify revenue and unlock new channels for sourcing used vehicles through exclusive auctions tied to its franchised dealer network. The development has set off a wide-ranging discussion among dealers, analysts and automakers about whether Carvana’s model could disrupt or even reshape the century-old franchised dealership system that handles the vast majority of new-vehicle sales.
The first taste of the strategy emerged with a Stellantis store in Casa Grande, Arizona, which has grown rapidly under Carvana’s ownership. Stellantis figures provided to CNBC show that the Casa Grande location sold more than 700 new vehicles in the most recent month—an outsize performance compared with its pre-acquisition monthly average of roughly 30 to 50 units. The store’s outsized volume has positioned it as Stellantis’ largest-volume new-vehicle location in the United States, a development first reported by The Wall Street Journal.
Carvana has not disclosed detailed plans for the new-vehicle franchise network, and CEO Ernie Garcia has declined to comment ahead of a media event this week where the retailer is expected to outline its strategy. Still, industry observers say the franchise push could deliver multiple benefits beyond the revenue from new-car sales. By allowing new-vehicle customers to exit with a Carvana purchase, the company could more easily recycle those customers’ used-vehicle inventory through exclusive auctions available only to franchised dealers, a mechanism that could streamline both the acquisition and disposition of vehicles across its platform.
John Murphy, a veteran Wall Street analyst and automotive consultant, told CNBC that Carvana entering the new-vehicle franchise space could be among the most disruptive forces the U.S. auto retailing landscape has seen in decades. The U.S. franchised dealership system includes about 16,990 retailers and generated roughly $1.3 trillion in sales last year, according to the National Automobile Dealers Association. Yet the model has remained relatively resistant to fundamental change, even as dealer groups have consolidated and pandemic-era shifts forced new kinds of investments.
The scale of Carvana’s ambition is underscored by the company’s stated capacity and strategic aims. Carvana has built a nationwide logistics and processing network for vehicles—an apparatus some observers compare to Amazon’s back-end for consumer goods. The company’s reconditioning capacity is quoted at around 1.5 million vehicles per year, a throughput that dwarfs its annual sales in the previous year, which stood at under 600,000. That capacity would support a more aggressive cycle of buying, processing and selling vehicles via both its digital platform and its new franchised network.
The new-vehicle franchises are located in several high-volume markets, including California’s Sacramento and San Diego, as well as Dallas, Atlanta, Cleveland and Boston, in addition to the Casa Grande site. The franchises are in addition to more than 100 existing Carvana locations, many of which are traditional vending-machine-like facilities and processing centers, though most have lacked a fully integrated parts and service network.
While the franchised dealers will continue to be a core distribution channel for new cars, observers note that selling new vehicles is more regulated on a state-by-state basis than the sale of used cars, and automakers often mandate dealer participation through allocations and other incentives. Notably, Stellantis has described Carvana as a corporate owner of its brands, a relationship consistent with other large publicly traded dealer networks like Lithia and AutoNation. Stellantis said it certifies tools and services that enhance its program and that any organization meeting its qualifications can operate as a franchisee after completing a rigorous onboarding process.
Industry voices have raised questions about how Carvana’s new-vehicle strategy will evolve. Sean Hogan, chairman of Stellantis’ National Dealer Council, cautioned that while competition can benefit consumers, many questions remain about Carvana’s approach to new-vehicle sales. He expressed curiosity about the model’s long-term viability and noted that if Carvana offers a superior framework, existing dealers would need to adapt or risk becoming irrelevant. Brian Gordon, president of the Dave Cantin Group, highlighted the potential revenue and gross profit opportunities that could accompany a hybrid model combining new- and used-vehicle ecosystems.
Some observers also point to Carvana’s unique operations as a potential advantage. The company’s online-first approach, combined with a robust logistics backbone and a growing network of physical facilities, could create efficiencies not present in traditional dealership groups. Dominique, a market observer, described Carvana as “showing the franchise dealer community how the power of digital can be applied to make a future direction retail model,” suggesting the potential for other dealers to emulate aspects of Carvana’s approach.
For now, analysts stress that the new-vehicle push remains at an early stage, with Carvana continuing to expand the footprint of its franchised stores while maintaining its emphasis on the online experience for used-vehicle sales. The discussion also touches on potential implications for service and parts networks. If Carvana scales the franchise model into the aftermarket space, it could alter the economics of after-sale revenue, a sector typically dominated by independent and dealer-owned service facilities.
Carvana’s leadership has hinted that the company intends to leverage its existing relationships and facilities to support the broader lifecycle of vehicles, including in areas such as financing and insurance, which the firm has previously handled in its used-vehicle business. The company’s approach to financing and partnerships with banks and lenders could influence how new-vehicle transactions at the franchised level affect liquidity and credit availability for buyers and dealers alike.
If the Casa Grande store is any guide, Carvana’s new-vehicle strategy may combine high-volume, digitally enabled purchasing with a more traditional showroom and service footprint to optimize end-to-end vehicle lifecycles. The industry will be watching how Carvana handles the delicate balance between online convenience and the hands-on requirements of new-vehicle sales and ownership, including the regulatory oversight that accompanies franchised operations.
As Carvana moves deeper into new-vehicle franchising, the conversations among dealers, automakers and analysts will intensify about whether the company can replicate its online-disruption playbook in a space that has long relied on strict franchise networks and in-person sales experiences. Whether Carvana’s model can redefine the consumer purchase journey or remain primarily a new channel for used-vehicle recycling remains a central question for the U.S. auto retail market.
