The recent pandemic has rocked the auto industry, causing vehicle sales to rapidly fall and change the way people shop for cars – focusing on the full online experience. This is where Carvana has a huge advantage. Along with announcing the opening of 100 additional locations across the country, Carvana had a strong advantage during the coronavirus era with already established online purchasing and vehicle delivery processes. We’ll take a look at one major market, Houston, and the impact Carvana has had on that area – both now and before the pandemic arrived.
In its first quarter 2020 performance news release and letter to shareholders, Carvana reported:
52,427 vehicles sold, a 43 percent increase YoY
Increase in vehicles purchased from customers by 157 percent YoY
Earnings of $1.1 billion in revenue, a 45 percent increase YoY
2016 – 2018 – Houston Market, Top Used Sellers
In 2016, Carvana didn’t even rank among the top retailers in Houston; however, by the end of 2017 and continuing throughout 2018, Carvana jumped into the number five spot for top selling used retailers. Not only did the emerging company make a name for itself at that time, they significantly decreased sales and market share for anyone who outranked them.
2019 & Q1 2020 – Texas, Statewide Top Used Sellers
Texas as a whole doesn’t see many Carvana stores in the top ten list, but Carvana Dallas holds strong at the top, and during Q1 2020 they are shortening that gap with CarMax Houston. This may prove that their Touchless Delivery and digital retailing played a huge part during the pandemic.
Looking at this data for Texas, this could easily be a ‘CarMax Takeover’ article, but Carvana has such an interesting customer experience model, and as our consumer behavior shifts more to online and distance shopping, Carvana will continue to progress. Carvana Austin (not shown) is showing slow growth within the state as well, only about 600 sales behind Charles Maund Automotive.
The real story here is that non-traditional retailers have taken over the used car business in the state of Texas. This may not be surprising to most automotive experts; however, it speaks to a concerning reality for traditional franchised dealerships.
With the addition of five new locations in Texas alone, and over 260 new markets across the country, we’re expecting to see more market takeovers towards the end of 2020.