Carvana expands into new vehicle franchises in the U.S. market

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Carvana expands into new franchises

Highlights

Carvana acquired seven new vehicle franchises since last year, primarily focusing on Stellantis brands such as Chrysler, Dodge, Jeep, and Ram.
Carvana's Casa Grande, Arizona store sold over 700 new vehicles in a month—up from 30-50 before acquisition—making it Stellantis' highest-volume U.S. dealership.
Expanding into new vehicle franchises exposes Carvana to regulatory hurdles, more profit centers, and challenges the traditional dealership model, with potential for industry disruption.

Franchise acquisitions broaden retail model

As reported by CNBC, Carvana has bought seven new vehicle franchises since last year, mainly selling Stellantis brands including Chrysler, Dodge, Jeep and Ram. The push marks a significant shift for a company that has been best known for online used car sales and nationwide vehicle logistics.

One of the newly acquired stores in Casa Grande, Arizona, has expanded rapidly under Carvana's ownership. It sold more than 700 new vehicles last month, according to Stellantis figures shared with dealers and provided to CNBC, making it the automaker's top-volume store in the U.S.; before Carvana bought it early last year, the dealership was selling roughly 30 to 50 vehicles a month.

Industry observers say the strategy could alter the traditional franchised dealer model. John Murphy, a longtime Wall Street analyst and automotive consultant, told CNBC that Carvana's entry into the new vehicle franchise business may be among the most disruptive developments in U.S. auto retailing in decades.

Regulatory hurdles and industry implications

Adding new vehicle franchises is expected to take Carvana into business lines beyond used sales and consumer auto lending, including parts and service as well as finance and insurance. Those areas are important profit centers for traditional franchised dealers and could deepen Carvana's relationship with customers beyond the initial vehicle purchase.

Still, selling new vehicles carries challenges that differ from Carvana's established used car model. New vehicle sales are regulated state by state, and in some states buyers can legally purchase a new vehicle only through a franchised dealer, a system that direct-to-consumer companies such as Tesla and Rivian have challenged with mixed results.

An annual study by Cox Automotive finds that most buyers do not want either a fully online purchase or a fully in-person transaction, instead preferring a blend of digital convenience and store interaction. That leaves open a key question for the sector: whether Carvana will build out parts and service operations tied to its new franchises or continue relying on more limited physical customer locations.

Our earlier coverage of the EU’s delayed trade agreement with the U.S. explained how lawmakers approved the pact to avert a looming escalation in U.S. car tariffs while leaving several disputes unresolved. We noted that even with some tariff relief and temporary measures, higher duties on select industrial goods and the risk of renewed levies remain a continuing source of uncertainty for businesses.

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