Given all the issues that Stellantis brands have had, you might assume that it would be a terrible time to buy a Chrysler Dodge Jeep Ram dealership franchise. Yet, that’s exactly what mega used car retailer Carvana did. Is this in order to start selling new cars? Perhaps, but there are much better reasons why Carvana might want a franchise and it has to do with three little letters.
It’s interesting that Carvana didn’t buy a Nissan dealership, or at least hasn’t purchased one yet. Nissan dealers seem to be a mess right now and one of their issues revolves around online ordering systems, which is something Carvana does quite well. If making cars is hard, so is selling cars. BYD might have the hot hand in China right now, but the company’s attempt to move vehicles in Germany hasn’t quite gone to plan.
Tariffs for the auto industry were in effect for about two days and were, as expected, quasi-reversed yesterday. What does this mean? Automakers are scrambling to explain how they’re going to build more cars in the United States before another deadline in a month.
You Down With CPO? Yeah You Know Me!
This week we learned that Carvana bought Jerry Seiner Chrysler-Dodge-Jeep-Ram of Casa Grande, Arizona, not far from the nationwide used car retailer’s headquarters. It’s a big deal. Carvana is a monster company and it’s managed to attract a lot of business by simplifying the used car purchase process and putting it mostly online. To some consumers, being able to pick a car online and have it delivered to their door is appealing. The company stumbled during the pandemic, but has roared back to life over the last couple of years.
Used cars, though, exist in a different universe from new cars. Someone can’t just start a dealership and call up GM, Ford, and Jaguar and just ask for new cars to sell. You have to buy a franchise from that automaker and, with that franchise comes a lot of rights as well as a lot of obligations. Selling used cars allows Carvana, within local and federal laws, to get around a lot of the obligations.
As Truman Capote once said, the problem with living outside the law is you no longer have the protection of it. The same applies to Carvana. The most obvious issue that Carvana faces as a seller of used cars is accessing used car inventory. Carvana, like dealers, accepts trade-ins. However, Carvana doesn’t lease new cars and, therefore, does not have access to off-lease vehicles, which is a big source of good used cars.
Here’s the current state of wholesale inventory from Manheim:
The market is up a bit year-over-year, but look how far it is from pre-pandemic levels. The whole industry is facing a huge shortage of high-quality used cars because, three years ago, tight supplies meant people weren’t buying or leasing as many new vehicles.
Having a dealership gives Carvana, which ships cars around the country every day, access to more high quality used cars. It can also, it’s assumed, participate in dealer-only auctions for cars. But it goes way deeper than that, as Car Dealership Guy points out in his latest email about this:
Right now (like many segments of the used car market) CPO cars are in shorter supply and will continue being tight this year. And by owning a CDJR dealership, Carvana can (in theory) certify Stellantis models under the automaker’s CPO program—adding warranties and quality assurances that boost buyer confidence and resale value. It’s a smart strategy that could elevate margins and reduce the number of returns.
Certified Pre-Owned cars historically command a higher price and, if costs are controlled, a higher margin. Being able to advertise CPO cars on the Carvana website would be a huge deal as, currently, Carvana only has “Carvana Certified” and not manufacturer-backed certified vehicles. Additionally, as CDG points out, Carvana could also get dealer wholesale pricing on parts and more help with service.
And all that’s from owning one dealership! In theory, it’ll sell new cars as well, but those in-the-know don’t see new cars as the appeal here for the company in the short-term. Long-term, obviously, if selling new cars is more successful it would be silly for Carvana not to pursue it, but then it’s competing with the Penskes and AutoNations of the world.
Nissan Has Had A Shop-At-Home Online Program for Years, Apparently
Did you know Nissan had a shop-at-home program? No? Me neither. In just another sign of how much work the brand has to do to get back to profitability at the dealer level, the company is going to try to improve a system that seems to be invisible to many consumers.
With broad retailer adoption, Nissan hoped the platform would standardize the shopping experience across national and dealership websites.
However, Nissan retailers have balked at the factory’s effort to manage the vehicle-selling experience.
“Give us the car on time, get the price right, and let us do the rest,” said a retailer, one of several interviewed for this story who asked not to be identified. “Let us sell the cars; that’s what we have invested in doing.”
Nissan U.S. sales and marketing chief Vinay Shahani said having a digital retailing solution is important as the shopping journey gravitates online.
“But it’s clear that the dealers don’t want just one solution,” Shahani said. “We have to figure out what’s the right offering so that the dealers have flexibility.”
Hyundai is trying something similar with Amazon, with mixed results so far. This seems like an easy thing to do yet, in practice, hasn’t been a slam dunk for most retailers.
BYD Wants To Sell In Germany On Features, Not Price
In all of 2024, BYD sold 2,891 vehicles in Germany. That’s not a lot considering that BYD wants to be a real player in the market at the level of something more like a Volkswagen than a Maserati. Additionally, BYD has two factories planned for the region (if you include Turkey) and is considering, at least, taking over a Volkswagen facility in Germany.
How do you square this? There are now two people in charge of making BYD a success in Europe. The first, Stella Li, is one of the most senior managers in the whole organization. The other, Maria Grazia Davino, was a former Stellantis exec in the UK you might remember as the woman who kinda threatened the UK government.
They both spoke with Manager Magazine about the issues BYD has had in Europe thus far:
MM: Ms. Li, there is a lot going on in Europe against BYD at the moment. Not only is the mood against Chinese products, but the euphoria about electric vehicles is also dampened. The likely new Chancellor, Friedrich Merz, announced during the election campaign that he wants to overturn the proposed ban on combustion engines. You are pushing electric cars onto the market. Doesn’t that harm you?
Stella Li: In the short term, this may unsettle buyers. But in the medium term, we are convinced that BYD will be successful in the market.
MM: What makes you so sure?
Stella Li: We offer the best technology, we bring innovations to the road, our cars are “cool stuff”.
I find this argument fascinating. While the interview goes deeper into the nitty gritty of adding dealers and differing management styles, the idea that BYD doesn’t see itself as a cheaper alternative but a better alternative would worry me if I were a European automaker. Japanese automakers took decades to transition from cheap-but-good to just-plain-good. Korean automakers did it in roughly half the time. What if Chinese automakers cut that time in half again?
The Detroit Big Three Get A Tariff Exemption… For Now
I guess the idea of $12,000 potentially being out on the hood of a new truck was too much for The White House to defend, so Press Secretary Karoline Leavitt announced that there would be a one-month pause for certain automotive activities.
Here’s how the Associated Press describes it:
Asked if 30 days was enough for the auto sector to prepare for the new taxes, Leavitt said Trump was blunt with the automakers seeking an exemption: “He told them that they should get on it, start investing, start moving, shift production here to the United States of America where they will pay no tariff.”
Trump had long promised to impose tariffs, but his opening weeks in the White House involved aggressive threats and surprise suspensions, leaving allies unclear at what the U.S. president is actually trying to achieve.
Automakers are already trumpeting moves to bring more jobs to the United States though, at least in the case of Stellantis, these appear to be moves that were already planned. Most carmakers can’t suddenly change all their production, nor is it particularly efficient to do so. Could GM or Ford move all their production to the United States? Maybe, but it wouldn’t be instantaneous, so how does this resolve? Can automakers just say a bunch of stuff and convince the Trump administration that this is good enough?
At the very least, President Trump has done the seemingly impossible and has made Canadian Prime Minister Justin Trudeau and his beleaguered Liberal Party suddenly popular ahead of elections this year.
What I’m Listening To While Writing TMD
Hey, it’s Manchester’s own super weirdo Freak Slug with “Spells” off her new album. Actually, the album came out in November and I totally missed it. That’s still “new” right? Either way, give it up to the Future Former Mrs. Adrian Clarke.
The Big Question
Have you ever shopped for a car on Carvana? Did you buy one?
Top Shot: Carvana/wolterke/stock.adobe.com
Carvana and Stellantis? A match made in hell.
https://hindenburgresearch.com/carvana/
In 2021 I was in the market for a compact or mid-size pickup and looked through Carvana’s inventory. They were asking full window sticker price for low-mileage examples. Since I had the luxury of time, I opted to build a 2022 Ranger to my specifications and get an actually new vehicle with full factory warranty instead.
“Have you ever shopped for a car on Carvana? Did you buy one?”
I haven’t bought or seriously shopped for a car since 2011 so no, no Carvana for me.
“You down with OPP, yeah you know me!”
If you know, ya know…
I know we’re supposed to be skeptical of Chinese cars, but damn does that pictured swoopy wagon thing look good
Sad to say, but all the dealers in southern arizona are so scummy and overpriced, that I went with carvana. It was cheaper, and hell, beats dealing with the crooks here.
“Have you ever shopped for a car on Carvana? Did you buy one?”
Story time!
Yes, I had my daily driver die in unfortunate circumstances (not my fault) in April of 2022, which the astute among you might recognize as being a time with extremely low inventory and high prices with used cars. Carvana had inventory.
I found what seemed like a decent deal on a Honda Accord. It seemed to drive find, but being no fool, I took it to my specialist for an inspection. They found it had clearly been in an accident and repaired off book, so not on CarFax and thus nowhere near the value I had paid. So took advantage of the return policy and sent it back.
I tried another vehicle. This one had a sunroof that someone opened when they were detailing it for delivery and it would not close again. To their credit, they called and let me know what happened rather than drop it off, but I told them no because I needed a damn car. That was it for me. Clearly they were not doing sufficient inspection on the vehicles they were selling, at least at that time. I won’t give them another chance.
The Nissan dealer saying “leave the selling to me!” makes me laugh. I’ve been to a few Nissan dealers and let me tell you, an online buying tool that cuts out those tools would make me at least momentarily consider buying a Nissan. I would eventually wizen up, but I think there are people out there that would genuinely consider some of their products if they could eliminate the dealer experience.
It doesn’t help that their poor sales of late seems to make their sales people all that much more desperate.
If they sold them on Amazon, their market of people whose credit is bad would fall, because the only financing option would be the “split payments up for 4 months”.
/s