Shopping for a new car is a trial everyone recognizes in the same ways: It’s a day (at least) long haul with haggling, paperwork and an experience mostly under dealership fluorescents. That thought is exactly why 43-year-old Joshua Higginbotham of Kansas City decided last month never to shop that way again. “I don’t want to spend a whole day in a dealership, and they always like to make it take an entire day,” he said after purchasing a new $51,000 Jeep Wrangler from his living room.
His purchasing vehicle was Carvana, the name that made used cars cool and giant glass vending machines hip. Carvana is the name also working quietly and steadily on one of the biggest disruptions the new-car market has ever seen in the last 100 years. Since last year, the online used-car retail behemoth quietly purchased seven new-car franchises all for Stellantis which sells Dodge, Ram, Jeep, Chrysler and Fiat.
Not a ripple, a tidal wave of concern and interest has washed through dealership lots everywhere. “Carvana entering the new vehicle franchise business may be one of the most disruptive forces that auto retailing has seen in the U.S. Market in decades,” John Murphy, a longtime Wall Street analyst who consults on auto retailers told CNBC. Carvana is looking to breach an industry fiercely protected by franchises and traditional practices one, made up of 16,990 dealers that sold over $1.3 trillion last year has long resisted outside disruption.
1. Carvana’s Arizona Dealership Became an Overnight Sensation
Carvana’s brand-new experiment with selling new cars, launched via the acquisition of Stellantis dealerships, is apparently the stuff of legends at least for starters. It’s very first Stellantis new car location, in Casa Grande, Arizona, has become the hottest new car store since it landed in Carvana’s possession. That store sold a paltry average of 30 to 50 new vehicles each month prior to being Carvana’d since, it’s been hitting upwards of 700 vehicles a month, with one month seeing its volume more than double 700, blowing the minds of dealerships everywhere.
Casa Grande Sales Surge:
- Previously sold 30 to 50 monthly
- Soared past 700 vehicles monthly
- Became bestselling Stellantis store nationally
- Proved digital-first model viability
- Acquired by Carvana early last year
Suddenly the place was the highest-volume Stellantis location in all of the U.S. And was a killer case study that the no-haggle, digitally minded model employed by Carvana can work even in the relationship business that new-car retailing typically is. Frankly, the sales figures say that consumers appear to love buying cars without having to haggle with an automotive salesperson over price.
2. Carvana’s Infrastructure Gives It a Massive Edge
Carvana’s game is more complex than it looks like on the surface with people trolling its website for new cars. The tech car lot has access to a significant logistical backbone already in place that has been directly likened to Amazon’s. This existing infrastructure a collection of processing, physical sites, and delivery operations across the country is something most existing dealer groups simply cannot compete with.
Carvana’s Infrastructure Advantage:
- Nationwide physical facility network exists
- Compared directly to Amazon logistics
- Already approved as website provider
- Bypasses standard third-party companies
- Hard for regional players to match
“Carvana already has that-digital, physical, logistical backbone, and that probably advantages them over the big, public, multi-brand public dealership groups,” said veteran auto executive Larry Dominique. Integrating the online sales system with a national delivery framework provides Carvana with a platform for both promoting and delivering cars that regional dealer groups may be unable to compete with effectively.
3. New Car Sales Unlock Crucial New Revenue Streams
In new vehicles, Carvana gains new avenues for revenue and key strategic benefits that will help it maximize value capture across the vehicle’s entire life cycle, versus just a specific piece of the puzzle. New vehicles will tap into three of the traditional four pillars of the auto dealership, that are all integral parts of dealership profitability, including new vehicles, used vehicles, and finance and insurance services, along with the parts and service offering which will be developed at a later stage in relation to the new vehicle operations.
The Four Dealership Pillars:
- New vehicle sales now added
- Used vehicle sales already mastered
- Finance and insurance already strong
- Parts and service remains unaddressed
- Completes the full business model
Since the company already was adept at used sales, finance, and insurance, it was jumping two major streams of revenue in its business all at the same time. It is building two important parts of a business all at once that car buyers care about most, and for that reason is the better business going forward.
4. Franchise Status Unlocks Exclusive Used-Car Auctions
Maybe one of the bigger perks of becoming a franchise dealer for Carvana is increased access to inventory. Franchised dealers get privileged access to some auctions that can only be used by dealers who are franchisees. These exclusive auctions are essential when it comes to accessing fresh, desirable inventory a channel where the company still has the most developed and established business lines to this day.
Used Car Sourcing Benefits:
- Access to franchise-only auctions
- Called a major game changer
- Strengthens core used car pipeline
- More trade-ins from new buyers
- Reinforces entire operational loop
It represents a major, major game changer in the secondary market,Murphy said of the availability. Availability, along with increasing numbers of used cars from the trade-ins of its new-vehicle customers, creates a more robust operational loop with more and better product than what Carvana was able to produce as a dealership prior to earning official industry creds.
5. State by State Franchise Laws Create a Regulatory Maze
Though promising early results and a defined strategy, Carvana has considerable hurdles to surmount in this new frontier. Regulating new-car dealers is tricky business with rules that differ from one state to the next. Furthermore, the sales model the original Carvana was based around involved the largely unregulated used car market-the new vehicle industry, however, falls under franchise law and regulations that define where dealerships are able to be built.
Regulatory Challenges Ahead:
- Rules vary dramatically by state
- Franchise laws govern showroom layouts
- Michigan requires franchised dealer purchases
- Tesla and Rivian faced similar battles
- Far more regulated than used cars
Even the way you’re legally able to buy a car is varied by state-you can’t actually purchase a car from a place like a Carvana or another direct-to-consumer entity in certain states like Michigan, a issue direct to consumer startups like Tesla and Rivian have long tried in courts of law to address. With such varied state-level regulations, the rollout will have to be measured by state by state.
6. The Unanswered Question of Parts and Service
Then there’s the hulking, unanswered question of parts and service. For decades, service operations has been part and parcel of a dealership, a significant contributor to profitability, and an important area where relationships with customers are cemented and prolonged. Carvana vending machines and inspection facilities can’t provide basic maintenance, warranty repairs, or engine work.
The Service Gap Problem:
- Vending machines cannot handle repairs
- Service is a major profit center
- Builds long-term customer relationships
- Adesa locations could fill gap
- Carvana’s plans remain unclear
That’s where there’s clearly still a hole to how Carvana can truly satisfy the customer post-sale. (Some believe that Carvana could eventually develop real service operations in part at the places of its Adesa auction business acquired in 2022, but the company’s plans there are not clear.)
7. Dealers Question Who Will Support Customers After the Sale
For dealers of Stellantis models on the local level, that question is a significant concern. “Does it change the paradigm and make this Carvana just simply a port to accept new car deliveries so dramatically that when we turn over that new vehicle to the customer, we don’t know who it’s coming home to? And then what if there’s an issue that arises post-sale,” asked Sean Hogan, the Chairman of the Stellantis National Dealer Council.
Dealer Concerns Over Service:
- Hogan questions post-sale responsibility
- After-sale support drives brand loyalty
- Dealership dynamic could fundamentally change
- Repeat business depends on service
- Concerns remain largely unresolved publicly
Which is a fair observation from Hogan, after all aftermarket is widely viewed as fundamental to customer loyalty or put another way repeat business in the automotive sector, and until this question can be fully answered traditional dealers will justifiably hold grave doubts that the Carvana model can wholly replace the full-service interaction they have engendered with customers over countless years.
8. Quality Control Questions Persist Within Carvana’s Operations
Exacerbating this issue are still lingering quality control issues in Carvana’s current operations more broadly. Despite the company’s embrace of AI tools for its vehicle reconditioning, customer gripes about the quality of vehicles remains a theme. One unhappy Carvana buyer purchased a 2024 Nissan Z, and after an oil change revealed engine alterations that had been undisclosed, along with traces of metal shavings.
Quality Control Concerns:
- AI tools used for reconditioning
- Nissan Z had undisclosed modifications
- Metal shavings found in oil
- Vehicle reportedly relisted after return
- Raises inspection thoroughness questions
Whether it was relisted quickly is irrelevant the fact remains that there appears to be real problems with the quality of inspection across the board if a Carvana vehicle can be purchased on, sent back to the dealer and quickly on sale to somebody else. These are all fundamental elements that Carvana simply has to get better at controlling and sorting out if its to get any further into a sector where scrutiny is already very real on quality and will no doubt be very real again on the quality of a new-car retailer’s quality checks.
9. Wall Street Is Betting Heavily on Carvana’s Success
Financial Markets Think It’ll Continue to be Carvana Notwithstanding The operating concerns noted above the financial markets do, however, appear quite determined to betting on the ongoing continued of the success that this company will bring with it. The company comes out of an incredible financial performance position. Just delivered the 6th consecutive quarter of >40% year-on-year growth in Retail Units sold. The performance in the first fiscal Q of 2026 is nothing short of extraordinary revenue increased 52% to $6.43bn and adjusted EBITDA was a record $672 million.
Carvana’s Financial Strength:
- Sixth straight quarter of growth
- Revenue climbed 52% year-over-year
- Record $672 million adjusted EBITDA
- Market cap exceeds $70 billion
- 17 of 26 analysts rate buy
Driven by market cap and analyst recommendations, including 17 buy and 26 Wall Street consensus, there is evidently strong confidence in Carvana’s plan overall and its execution of that plan as well even when factoring in pending problems, operational and regulatory, and providing its new car segment considerable investment cash, whether that be cash from current operations, new lending facilities or debt offerings.
10. A Possible EV Partnership Could Redefine Carvana’s Future
However, the company’s interest in exploring the electric vehicle market opens up yet another potentially fascinating chapter. According to disclosures filed with the Securities and Exchange Commission, Carvana received a warrant in 2025 that will allow it to purchase a stake in Slate Auto, a privately held electric car company backed by Jeff Bezos. Slate wants to sell cheap electric cars to consumers but has not yet been able to put together the required physical and logistical capabilities to make the business work on a significant scale.
The Potential Slate Connection:
- Carvana holds warrant in Slate
- Slate is a Bezos-backed startup
- Slate lacks distribution infrastructure currently
- Mark Walter holds stakes in both
- No formal partnership confirmed yet
Teaming up with Carvana, who already have the infrastructure for distribution, would remove their largest logistical pain points, whilst at the same time giving the new to be player a big part in the nascent (as yet) massive potential of EVs. To cement that a billionaire businessman Mark Walter who owns a large chunk of both companies could be the glue that sees Carvana used to distribute next-gen vehicles.
