Carvana is allocating more marketing dollars and technological capabilities to the company’s business of buying cars, something Chief Executive Ernie Garcia called “a significant fundamental step toward achieving our long-term goals.”
As the company continues to expand geographically, light inventory has been a “pinch point” for Carvana, Garcia said in the company’s second-quarter earnings call last week. “If we’re selling a lot more cars than we expected, sometimes our inventory can get lighter, and that can reduce sales versus what they otherwise might have been,” he said. The Tempe, Ariz.-based company sold 44,000 vehicles last quarter, a 95% increase year over year.
The business of buying cars from customers increased 188% year over year in the second quarter, fetching 16,000 units that were bought from customers who did not subsequently buy cars from Carvana. The growth in that business was faster than anticipated, Garcia said, noting that in the past year the company has put a lot of focus on it.
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Currently, Carvana airs a commercial on various video channels promoting the message that it buys cars from consumers regardless of whether they subsequently buy a car. The company has developed other marketing materials for that purpose, but the “none of them are nearly as invested in from a dollar perspective as the commercials,” Garcia said.
Operationally, much of the technology framework behind that business is already built out, so it’s a matter of execution – that is, managing the process of switching the titles, passing funds to consumers in a simple way and scheduling a time to pick up the car and following through on that schedule, Garcia said. “All of those areas are areas that we expect to continue to improve in and we’ll keep investing in,” he added.
