by Used car giant Carvana has now snapped up its sixth Stellantis dealership in the United States, and that buying spree is starting to make existing franchise owners uneasy. The online retailer appears to be quietly positioning itself for something bigger, potentially shaking up how new cars are sold.
Last week, Carvana purchased its latest Chrysler, Dodge, Jeep, and Ram dealership in Boston, having already closed deals on sites in Phoenix, Atlanta, Dallas, San Diego, and Sacramento over the past year, spending more than $160 million in the process.
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The company is remaining tight-lipped about its plans, but some industry observers suspect Carvana is targeting Stellantis stores because of the carmaker’s recent financial and sales troubles, and the possibility of a bounce back with the help of new V8-powered and hybrid models. As such, these dealers serve as a “cheap entry point” for Carvana to the new car market.
Dealers Are Worried
The move has ruffled some feathers, The Detroit News reports. Members of Stellantis’s dealer body fear Carvana may undercut other stores on price, and the possibility of offering convenient home delivery in areas outside their territory. New car listings on Carvana already show it’s offering free shipping to locations hundreds of miles from a dealer.
Stellantis is no doubt aware of what Carvana is doing. In a recent letter sent to dealers, Stellantis spokesperson Ann Marie Fortunate failed to address the company’s moves, but did announce a new rule from the start of this year, where “no person or entity may acquire more than one CJDR dealership within a rolling 12-month period.”
She didn’t say whether this rule was implemented because Carvana was snapping up facilities, simply stating it was made due to “an increase in interest from new and untested dealers to our network to purchase a number of locations.” Fortunate added, “the rule was put in place so we can continue to focus on building a healthy, competitive dealer network that provides exceptional service for our customers with the brands they love.”
It’s not just Carvana that’s interested in CDJR dealers. No fewer than 75 were sold last year, and analysts believe that Carvana’s expansion into new cars will help boost business for its in-house financing operation and help it grow its inventory with more trade-in vehicles. It could also expand into vehicle servicing, another area where it could boost its profits.
