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Hey everyone,
As we reported this story, a question that came up was: What if every dealer began selling across the country at scale?
What would it look like?
Got thoughts? Send them to [email protected]
— CDG
Everyone knows Carvana’s ability to ship cars anywhere helps explain the “how” of its success with Stellantis so far.
But recent registration data seems to reveal an interesting pattern in the “where” of its sales and “what” it is selling.
What we mean: From May through August, Carvana’s seven CDJR stores registered 4,687 new vehicles across 3,269 ZIP codes in 42 states, according to Mobility Global data analyzed by researcher Chris Wood.
That isn’t typical, even for big dealer groups.
So, today’s newsletter explains how this pattern is playing out, the markets showcasing it best, and the inventory backing it.
(The map below illustrates the retailer’s reach.)
Carvana is scooping up sales all over the map, something few dealers do.
Wood, VP of client strategy for automotive at LocaliQ Automotive/USA Today Co., found that in about 73% of those 3,269 ZIP codes, Carvana registered just one vehicle.
Meanwhile, AutoNation registered nearly as many new CDJR vehicles from May through August, 4,181, but in 1,330 ZIP codes, as seen below.
(Home markets here are designated market areas (DMAs), the regional markets the industry uses to map where buyers live.)
In the second quarter, the typical CDJR dealer kept 86.1% of its registrations at home, Wood found.
New Jersey makes a clean test case. Carvana has no store there, so every new CDJR vehicle it registered in the state came from out of market.
Carvana’s 340 New Jersey registrations came in ones and twos, landing in 221 of the state’s 685 ZIP codes, or 32%, at about 1.5 apiece.
“[It’s] small pockets of demand, aggregated at scale,” Wood said.
Chris Wood
LocaliQ Automotive/
USA Today Co.
The map below illustrates the scatter.
Carvana registered exactly one vehicle in 139 of those ZIP codes and two in another 59. The busiest, Toms River, got six over four months.
That spread makes it hard to spot, but the handfuls add up.
Nationwide, instead of death by a thousand cuts, it’s like sales success via thousands of ZIP codes.
But Carvana isn’t the first retailer with this kind of reach.
Not so fast, rookies: Out-of-state sales aren’t against the rules, and before Carvana’s splash, a Lake Charles, La., dealer was already selling in all 50 states, its owner told CDG News.
Mark Boniol, dealer principal of Mark Dodge, Chrysler, Jeep, Ram, credits Dave Smith Motors in Idaho for pioneering national sales.
Boniol said that “every dealership in America is selling across state lines.”
“Every one of them has sold to somebody in another state or outside their supposed sales territory,” Boniol said. “The internet doesn’t respect state lines. The internet doesn’t respect an arbitrary sales territory.”
Mark Boniol
Mark Dodge, Chrysler,
Jeep, Ram
Mark Dodge’s numbers look a lot like Carvana’s.
In the second quarter, the typical CDJR dealer reached buyers in just seven DMAs, while Mark Dodge’s single store reached 136 and kept 14.4% at home, according to Wood’s analysis.
That’s more markets than any one Carvana store reached, and nearly as many as all seven combined (141).
Mark Dodge’s 1,007 registrations that quarter also topped every Carvana store except Casa Grande.
That 14.4% counts only the Lake Charles market. Statewide, Louisiana is still Mark Dodge’s biggest.
Boniol said the store sold 4,013 new vehicles last year, and about 45% (1,789) went to Louisiana buyers. Texas, with its border 30 miles away, was next at 1,098.
How he does it: Boniol said these four in-house departments help make his national operation work.
His store began signing F&I customers remotely in January 2020.
He said the store’s titling center registers vehicles “in every county in the United States.”
An in-store logistics department, a manager and two employees, helps customers arrange shipping, which is free within 300 miles, he said.
A sold-order department. He said sold-order vehicles spend far less time on the lot, and the model costs “only 42 percent of the expense of the traditional model.”
Boniol bought the Lake Charles store in 1997, when it was the only one of its size within about 70 miles. He thinks about sales zones differently now.
“I don’t see markets like that anymore,” Boniol said. “I think of us as a national dealer.”
Still, it’s the exception. Among the 1,347 dealers Wood benchmarked in the second quarter, 96.3% kept most of their registrations in their home market.
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Carvana is outselling nearly every New Jersey dealer without a store there.
To understand how, start with this: Where a sale is registered isn’t necessarily where it happened, since clicking “buy” on any of the seven store sites funnels buyers to Carvana.com.
Back to Jersey: Carvana accounted for 340 of the state’s new CDJR registrations from May through August, according to Wood’s analysis.
Of those, 332 were attributed to its Stellantis store in Casa Grande, Ariz., enough to rank that individual dealership No. 2 among all CDJR retailers to New Jersey buyers.
“The registration assignment was determined by Carvana,” Wood said. “We don’t know what their registration decision-making process is, but we’re watching it evolve.”
Registration data can also lag, so monthly totals may keep developing.
Here’s how the top 10 stack up.
About 81% of New Jersey shoppers bought their new CDJR vehicle from an in-state dealer, but no one dealer dominates.
The state’s top seller, Nielsen Dodge, Chrysler, Jeep, Ram, had just 4.9% of the 8,315 registrations. Carvana’s 4.1% was enough for No. 2.
And no other out-of-state dealer comes close to Carvana.
Of the 1,566 New Jersey buyers (19%) who bought out of state, Carvana won 21.7% (340), more than all Pennsylvania dealers combined (308). (As illustrated below.)
Only New York dealers, 45 combined, registered more (588).
The biggest single New York seller registered 112 and sits right on the New Jersey border, Wood said.
Laura Perrotta, president of the New Jersey Coalition of Automotive Retailers (NJ CAR), told CDG News via email that their understanding was that “Carvana is heavily investing in digital advertising in New Jersey, and that may have led to increased sales.”
“Additionally, their logistical network and national presence add to their capabilities,” Perrotta said.
Laura Perrotta
New Jersey Coalition of Automotive Retailers
Disruptive or not: New Jersey dealer Tom DeFelice III, dealer principal for Circle Motor Group, calls it the Carvana conundrum, because “on one hand, you worry that they’re achieving all this by, you know, by not being above the board and not playing by the same rules…”
“But on the other hand, if they are doing it legitimately, then that means that regular dealers can copy what they’re doing, and that may ultimately be a good thing… if we can figure out how to mimic what they’re doing, selling a bunch of cars with a lot less expense,” DeFelice said.
Tom DeFelice III
Circle Motor Group
For its part: All Stellantis dealers, including Carvana’s, operate under the same allocation and incentive rules, the company said in an Oct. 16 email to CDG News.
“We do not restrict where dealers sell vehicles within the United States,” Stellantis wrote.
Carvana’s sales are leaning Jeep, and its Gladiator pool is running deep.
Jeepers: Where Carvana’s sales land is fascinating, and so is the mix of what it sells and stocks.
Jeep made up 70.7% of Carvana’s new CDJR registrations from May through August, vs. 49.7% nationally.
Ram ran the other way, making up 17.6% of Carvana’s pool, vs. 39.8% nationally.
See the brand mix below.
Garden State Gladiators: Carvana sold a heap of the Jeep pickups to New Jersey buyers.
Buyers there registered 190 Gladiators from May through August, and Carvana’s Casa Grande, Ariz., store accounted for 33 of them, or 17.4%, more than any other dealer.
Those 33 trucks went to 30 different ZIP-town combinations. Only Barnegat, Trenton and Toms River got two.
In stock: Carvana also had access to a much larger visible Gladiator pool.
From June 15 through Aug. 31, Carvana had 337 Gladiators in inventory, while the 40 New Jersey CDJR dealers averaged 234 combined from May through August, or about six per dealer, as illustrated below.
Wood noted that Carvana can show its whole inventory to a shopper in any single ZIP code.
“I’m more likely to find what I’m looking for in that basket of 4,700 cars than I am in that basket of 100 cars,” he said.
On Oct. 15, Carvana showed 495 Gladiators to shoppers in Lyndhurst, N.J., while 36 New Jersey dealers had 197 combined.
“The advantage is not scarcity; it’s aggregation advantage,” Wood said.
(FWIW: Carvana said it keeps new vehicles at its locations until they’re sold, with overflow at other company storage sites, as many dealers do. It also said its new-vehicle prices are the same no matter where the buyer lives.)
Where the pool runs shallow: Ram is where New Jersey dealers stocked deep, and Carvana didn’t, according to the data.
New Jersey’s 40 CDJR dealers averaged 1,715 Ram 1500s combined from May through August, or about 43 per dealer.
Carvana averaged 435 from June 15 through Aug. 31.
“Like if you do a Ram 1500 search, they barely show up. Why? Because Carvana doesn’t have the Ram 1500 inventory,” Wood said.
Wood’s theory: Carvana could be spending more of its ad budget per vehicle on Jeeps than on Rams.
“It’s the economic advantage that comes from having the size of inventory and demand pool,” he said. “It’s not necessarily from having a better local market.”
The bottom line: Carvana says its focus is on customer experience.
Boniol, of Mark Dodge, says any dealer can build the same departments he has, though it isn’t easy.
Still, he doesn’t see Carvana replacing franchise dealers.
“Carvana is not fixing to shut the car business down,” Boniol said.
If the franchise model is headed toward the Carvanas and Mark Dodges of the industry, dealers and OEMs will have to work out together what selling nationwide looks like.
