After a decade in business, online used-vehicle retailer Carvana may, for the first time, record a profit this quarter. Although the company and its towering vending machines that dispense vehicles bought online created great excitement around a new way to buy, sell, trade in and finance used cars, it has clearly struggled with its business model.
Carvana is not alone; in general, used-car dealers and auto auction companies continue to grapple with digital transformation, even as consumer demand increases. The difficulty of building a profitable online model mainly stems from the fact that inspecting and placing a value on used cars has long been an in-person, bricks-and-mortar type of business; state laws requiring ink rather than digital signatures and other bureaucracy can also add extra in-person steps.
But that is changing. New technology is making it possible for used-car dealers and auction companies to move their businesses online and still make a profit. In addition, regulatory changes that are eliminating in-person signatures and other tasks are paving the way for making online vehicle transactions increasingly seamless. Online transactions will no doubt be an important element of success for both dealers and car auction companies, making it essential they figure out how to do them efficiently.
Check out the full article by Eliron Ekstein in WardsAuto here.