Is This The End Of Car Dealerships As We Know Them?

Danielle Beurteaux

Carvana might have first come to your attention thanks to the company’s car vending machine. Which is exactly what it sounds like. Sure, it’s a bit gimmicky, but the point is made: buying a car should be that easy. Almost as easy as satiating a craving for mid-afternoon Doritos.

The Phoenix-based company just added another funding round with a $160 million Series C. In 2013, it raised a $50 million Series A. Carvana wants to put more of its car vending machines around the country. The first was set up in Nashville at the end of last year.

People don’t like going to car dealerships. Really, really don’t like them. A survey by Accenture last year found that 75% of respondents would complete the entire car buying process online if they could. And while the car buying process hasn’t changed much since the first dealership opened – and has resisted change – the digital economy might, at last, be upsetting the car buying tradition.

Carvana works like this: Shoppers find a used car on the company’s website, take an online tour of the car, buy it online (they say it takes 20 minutes), and then have it delivered or pick it up – that’s where the vending machines come in (they also offer travel reimbursement if there’s no vending machine in the buyer’s area). Every new car owner gets a seven-day test period.

That’s a pretty straightforward online transaction, and it wouldn’t be shocking if we were talking about anything but car buying.

There are, unsurprisingly, other startups getting in on this market, too.

Beepi, started in 2013, has the same aim, but works on a different model. The company is more a matchmaking service for car sellers and buyers. Sellers register their car on the company’s website, and Beepi sends out an inspector to check it out. If it passes the inspection, it’s made available to other Beepi people. The company guarantees it’ll sell the vehicle within 30 days, or, if not, it will buy it. Buyers can also buy online, and the car is delivered to them (the car stays with the seller until it’s sold).

Vroom, in New York, was also founded in 2013 (do we sense a trend here?). Like its competitors, would-be buyers shop for a car on its site, arrange financing if they want, and their new auto is delivered to their door. They’ve got seven days to keep or reject. (The company also has an ad featuring John Leguizamo and Rachel Dratch riding an ostrich and a yak, respectively.) The company is planning on opening four virtual reality showrooms across Texas and Arizona as pilot projects, with plans to expand if they’re popular.

Roadster, only available in California at this point, is a bit different in that buyers can use its website to find the car they want, and then Roadster finds it at a dealer. It’s basically a middleman, but does remove the need for a trip to your local dealership strip. And then Roadster will deliver the car to the buyer’s home.

Not everyone is convinced that car buying will be successful online or that we’re seeing the beginning of the end of the brick-and-mortar dealership. Some companies are replicating the in-person dealership experience online, including the final price negotiation step. However, they’ll need to contend with a generation of buyers who grew up with online, one-click shopping, and perhaps don’t see the point in buying the average car in person. For those consumers, Carvana and its cohort could be a natural choice.

Carmakers, auto dealers, and any other brick-and-mortar business: take heed of these 4 Ways to Digitally Disrupt Your Business Without Destroying It.

Image: Norsk Elbilforening via Wikimedia Commons


Danielle Beurteaux

About Danielle Beurteaux

Danielle Beurteaux is a New York–based writer who covers business, technology, and philanthropy. Her work has appeared in The New York Times and on Popular Mechanics, CNN, and Institutional Investor's Alpha, among other outlets.