What’s Carvana really after? 5 clues from its new car franchise acquisition

Hey, everyone — Each week, we deliver 2 concise, must-read recaps of the Car Dealership Guy Podcast — packed with the top 10 lessons learned from each episode.

Join the automotive insiders already getting the industry’s expert takeaways straight to their inboxes by voting below 🔽

—CDG

First time reading the CDG Newsletter? Subscribe here.

Welp—it finally happened. As many predicted (myself, sort of, included)—Carvana is diving headfirst into new car franchises with the acquisition of a Stellantis dealership—Jerry Seiner Chrysler Dodge Jeep Ram in Casa Grande, Arizona. 

And Anthony, an automotive software developer on LinkedIn, commented what we’re all thinking… it’s about time!

From what I’ve seen online—there are mixed opinions on what this move really means for Carvana’s strategic goals and the industry at large.

But I should make one thing clear—I don’t think this acquisition is about new car sales in the slightest. After all—Carvana ≠ CarMax and the market today is very different.

David, a former GM, who commented on my LinkedIn post is right—CarMax had a good run with new car franchises, but… it eventually fizzled out in 2021…

From my POV there are several more important “high-leverage” activities Carvana can unlock with a purchase like this one which is pretty immaterial on its balance sheet. Activities like…

Strategic goal #1: Certify the hell out of some pre-owned cars.

Details: Right now (like many segments of the used car market) CPO cars are in shorter supply and will continue being tight this year. And by owning a CDJR dealership, Carvana can (in theory) certify Stellantis models under the automaker’s CPO program—adding warranties and quality assurances that boost buyer confidence and resale value. It’s a smart strategy that could elevate margins and reduce the number of returns.

The underlying angle: Tighter CPO inventory due to an off-lease shortage will likely limit overall market growth. But it will give Carvana an edge in securing CPO units others can’t. The challenge lies in execution—scaling CPO requires alignment with Stellantis, added costs, and operational adjustments that could slow adoption.

The wrench: Stellantis may push back on how its CPO program is marketed through Carvana’s platform.

Another commenter, Joshua, hits the nail on the head. Now, Carvana actually has an OEM to answer to…

Strategic goal #2: Secure access to CDJR’s closed auction sales. 

Details: This is a big one. This means Carvana can tap into restricted dealer-only wholesale auctions and negotiate directly with lessors for high-quality used cars before they hit the auction block / broader market. This strategy ensures a steady, cost-effective pipeline of used vehicles—critical for helping Carvana achieve its annual target of 2 million sales.

The underlying angle: Carvana needs inventory to fuel its engine, and this move could strengthen its supply chain in today’s used car market. And frankly, I think having access to enough inventory is one of Carvana’s biggest long-term risks.

Toyota of Ann Arbor’s inventory manager Justin, mentioned how this could upend Carvana’s wholesale auction bidding wars with CarMax…

The wrench: Integrating auction access and off-lease deals at scale could potentially face resistance from OEMs and other dealers.

Outdated payment systems are draining dealership profits.

Dealer Pay isn’t just a credit card terminal—it’s a fully tailored payment solution built to meet your dealership’s unique needs.

Our cutting-edge technology streamlines payments across your entire operation, from the service department to the cashier’s office. Say goodbye to hidden fees and manual work, and hello to detailed reporting, seamless integrations, and built-in compliance features.

Stop letting inefficient processors eat into your profits. With Dealer Pay, you’ll save time, cut costs, and boost financial performance—guaranteed.

Dealer Pay isn’t just another terminal; it’s the smarter way to manage payments across your entire operation.

Strategic goal #3: Receive wholesale parts directly from Stellantis.

Details: Traditionally, online used car retailers rely on third-party vendors for repairs, driving up expenses. But owning a dealership gives Carvana direct access to OEM parts at bulk pricing—eliminating middlemen and potentially further simplifying the supply chain.

The underlying angle: While there’s a clear cost-saving advantage, it’s more of a practical upside, not a game-changer.

The wrench: Carvana could encroach on the cost advantages traditional dealers typically have, and intensify competition.

Ok—now that we’ve gotten the big ones out of the way. There are a couple of low-stakes activities worth mentioning…

• Entering the service business: Dealership service departments generate significant profit, and now—Carvana could offer in-house repairs or even expand into a broader service network. However, its digital model hasn’t historically prioritized service—making this a stretch. This could serve as testing grounds for future opportunities.

• Forming a product testing hub: Carvana could use the CDJR location to experiment with AI-driven pricing, in-person sales processes, or hybrid online-offline models, gathering data to optimize its platform. But it’s not the company’s core competency or likely its immediate priority.  

So—what does all this mean for auto retailers not named Carvana?

Think about it—this isn’t just about one store in Arizona. It’s about what happens if Carvana scales this model. Suddenly, they’re not just a used car disruptor. They’re a player in the dealership space, with access to multiple inventory pipelines, a new type of dealership cost structure, and manufacturer programs that could be directly competitive with other dealers.

Ryan, from Garber Automotive, made an excellent point on LinkedIn, too. If Carvana can match its new car sales volume to used—it would be one of the biggest retailers in the country…

And if Carvana’s acquisition strategy expands, blue-sky multiples could increase, enticing retiree-owned dealerships or underperforming franchises to cash out to Carvana. While heightened M&A activity could attract private equity—injecting capital into the sector—it could also increase financial pressures on smaller players.

Bottom line: For now—this might be a low-stakes experiment for the retailer, but if Carvana proves it works, it could challenge long-held assumptions about who gets to play in the franchise system—and on what terms. Dealers may not feel the impact today, but the rules of engagement could start shifting sooner than they think.

***Hit Reply and let me know—is Carvana rewriting the rulebook, or is this just a blip on the radar?***

Lessons from Lithia and beyond—the habits driving a successful dealer group with happy employees

Stream now on YouTube, Spotify, or Apple. And shout out to Phone Ninjas and CDK Global for making this episode possible!

Industry Spotlight: Tasca Auto Group's secret to bringing long-lost customers back to the dealership

Stream now on YouTube, Apple, and Spotify. And shout out to BizzyCar for making this episode possible!

Three opportunities hitting the CDG Job Board right now:

• Ron Marhofer Auto Family: Automotive EV Technician (Ohio).

• HoneyCar: Corporate Reconditioning Director (Virginia).

• Dealer Pay: Director of Marketing (Remote).

Looking to hire? Add your roles today—it’s 100% free.

• Why automakers including Honda and Toyota are pouring millions into rockets and satellites.

• ‘Enormous’ hit for automotive sector from tariffs, part maker Forvia predicts.

• Dealership group sued by city for cleaning up vacant industrial lot.

• Automakers have opportunity, challenges in advancing autonomous driving.

• Mercedes to cut headcount, lower pay increases amid cost-cutting drive

Thanks for reading. See you on the next edition…

—Car Dealership Guy

Want to advertise with CDG? Click here.

Want to be considered as a guest on the CDG podcast? Right this way.

Want to pitch a story for the newsletter? Share it here.