Tips, Tricks & Trends

Pandemic Automotive Battle, Online Sales vs In-Person Sales

In 2012 a company called Carvana launched a dealership network with the aim of providing consumers the opportunity to purchase their next used vehicle through a totally online experience. During the global COVID-19 pandemic, the company has done better than most, proving that people are increasingly open to the online sales business model.

DTC cleaning staff chemically disinfect and sanitize a taxi as a precautionary measure in view of coronavirus concerns
Disinfecting a car due to COVID-19 Coronavirus concerns | Sanjeev Verma/Hindustan Times via Getty Images

When Carvana launched, they did so on a grand scale. They have continued to open dealers in city after city, year after year. They are now in 260 markets, and earlier this week, they announced their intention to open another 100 stores in areas near their existing stores. On the surface, the announcement does not seem to make sense. How are they planning to do this when the automotive industry is down drastically overall around the world?

Online car sales are doing better than in-person purchasing

When you dive into Carvana’s numbers, you start to find that they are doing much better than the majority of the industry. Some parts of the industry have had losses of 40 to 80%. However, Carvana actually had a 43% increase in first-quarter sales, a loss of only 30% for April, and is already seeing a rebound for May.

Even during a pandemic, there are people who still need vehicles. Although many who would have purchased a new model are finding their wallets stretched due to the global shutdown, they may still need that car, truck, van, or SUV. So, they are considering used online purchases as a safe way to complete a transaction and stretch their dollar. That is where Carvana shines.

Some dealers struggle to switch to the online model

Many other dealer networks already had an online component for sales in their dealerships. However, during the pandemic’s lockdown, many of those dealerships have struggled to embrace it more fully. This flaw has become more apparent in recent weeks. Carvana, on the other hand, has already been operating with full dedication to the online sales model, including home delivery. So, their financial numbers have been proving that while the rest of the industry has suffered great losses, the company is, in fact, doing better than most during the pandemic quarantine.

Chief Executive for Carvana, Ernie Garcia, said,

“Something that’s happened with this pandemic is that it’s gotten many consumers who previously wouldn’t have bought a car online to now buy it online,”

“The whole digital part really is empowering for the buyer because there’s so much information that you can use to make an informed decision,” said Matt DeLorenzo, managing editor of KelleyBlueBook.com.

A sold sign hangs on a truck after making a sale.
A “Sold” sign hangs from the rearview mirror of a Ford Motor Co. F-250 truck at a car dealership | Daniel Acker/Bloomberg via Getty Images

Buyer beware

Carvana is not the only company in the online purchasing space of the automotive market. Companies like Vroom, Fair, and others are out there offering the online experience. As always, though, buyer beware. Do your research before committing to anything. The last thing you want to do is regret a purchase, whether you bought it online or in-person. 

Overall though, consumers are showing the automotive industry that they are ready, willing, and able to shop online for a car. Carvana, which has been an early adopter of the full online experience, has been reaping the benefits of this consumer demand, even during a pandemic. The company is slowly proving that buying cars from home works.