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Online car-sales company Carvana enters Indianapolis market

November 22, 2016

Carvana LLC, a fast-growing Phoenix-based company that allows customers to buy and sell used cars online, launched its service in Indianapolis Tuesday.

Since launching its service in Atlanta in late 2013, the company has been rapidly adding metro markets across the country. Indianapolis marks Carvana’s 20th market and the 11th to open this year.

“We’re growing very, very quickly,” said Ernie Garcia, Carvana’s CEO and one of the company’s three cofounders.

Carvana has an inventory of about 7,000 cars in various spots around the country. Customers can browse the selection and purchase vehicles online at the company’s website, www.carvana.com. The vehicles are then delivered to the customer’s home. Upon delivery, the purchaser has seven days in which to return the vehicle for a full refund. Vehicles also come with a 100-day/4,189-mile bumper-to-bumper warranty.

Customers also can sell their cars using the site.

The company says it can sell cars for less because it doesn’t have the overhead associated with a traditional car dealership. Customers have saved an average of $1,461 per purchase over the Kelley Blue Book suggested retail value, Carvana says.

“The offering that we have is pretty unique in the marketplace,” Garcia said.

What does it mean for an online company to launch in a particular market?

For one thing, Garcia said, it means that customers within a 100-mile radius of Indianapolis pay no delivery fees. Customers who live outside of a Carvana market can still buy a car through the site, but delivery takes longer and customers must pay a third-party delivery charge that typically runs between $300 and $1,000, Garcia said.

Launching in Indianapolis also means Carvana has hired a handful of local employees and purchased trucks to deliver vehicles to customers’ homes. The company has about eight Indianapolis employees, Garcia said, and that number could grow to 20 or so as the market grows. These employees will handle the last leg of delivery, taking each vehicle from an Indianapolis distribution site to the customer’s home.

The idea of buying a car without seeing or driving it first takes some getting used to, Garcia admitted. However, he said the company’s rapid growth shows people are willing to take the plunge.

In 2013, Carvana had revenue of $4 million, Garcia said. That number rose to $40 million in 2014, and was nearly $140 million in 2015. This year, he said, revenue is expected to top $350 million.

The company has yet to make a profit, Garcia said, and it has not made any public predictions about when it might achieve that milestone. Carvana could achieve profitability more quickly if it were to slow its growth, Garcia said, but the company is choosing to focus on growth because of the high sales demand it’s seeing.

“It’s been better received than we could have possibly hoped for,” Garcia said.

“It’s not (just) a millennial product. We’re selling cars to people in every demographic.”

The company has its largest physical presence in two markets: Atlanta and Nashville, where it operates "car vending machines." The attention-grabbing "vending machine" in Nashville is a five-story automated glass tower that stores up to 20 pre-purchased cars for pickup. Others are planned for Houston and Richmond, Virginia.

Carvana is not the only online used car marketplace. Competitors include Beepi, Carlypso, Shift and Vroom, among others.

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