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Carvana Says Partnerships Provide New Horizontal, Vertical Opportunities

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Used car retailer Carvana highlighted two recently announced partnerships Thursday (Nov. 4) during an earnings call with investors and analysts. In one, the company will provide an online sales channel to vehicle rental company Hertz. In the other, Carvana will work with InsurTech carrier Root to develop integrated auto insurance solutions for Carvana’s online car buying platform.

“These partnerships are each very exciting,” Carvana CEO Ernie Garcia said during the call. “Each has excellent underlying fundamentals and therefore excellent potential, but they’re also exciting because of what they represent. As we continue building the Carvana platform to deliver exceptional customer experiences and to handle the constantly increasing scale, our horizontal and vertical opportunities continue to increase.”

A Flow of High-Quality Used Vehicles

Carvana and Hertz are partnering nationally — following a pilot in September — to enable Hertz to use Carvana’s online transaction technology and logistics network as another channel to sell the used vehicles from its rental fleet, the companies announced Oct. 27.

Read more: Hertz Teams up With Carvana to Grow Online Sales

Compared to other ways Hertz sells vehicles, this will allow it a more efficient direct-to-consumer (D2C) sales channel, reducing its reliance on wholesale disposition, the vehicle rental company said in a press release. In addition, Carvana’s logistics network will allow Hertz to expand its retail reach beyond its 68 Hertz Car Sales locations and into 300 markets across the country.

For Carvana, the partnership will deliver a flow of high-quality vehicles that Hertz bought directly from the manufacturer, used in its rental fleets and now wants to sell to another consumer. It will also mean less work per transaction for Carvana when acquiring cars to sell.

“They’ve got a really high-quality asset there, and I think that would be very hard for us to replicate on our own,” Garcia said during the call. “And then we would like to think at least that what we built, which is a really high-quality, highly scalable platform to sell cars to customers, would be very hard for them to build. So, we’re natural partners in that way.”

Integrated Auto Insurance Solutions

In the other partnership, which was announced Aug. 11, Carvana is working with Root to integrate auto insurance alongside the existing car purchasing and financing experience offered to customers on the online car buying platform. When announcing the partnership in a press release, Garcia noted that by offering auto insurance, Carvana will be able to deepen and extend its customer relationships between transactions.

“The insurance business is a very complicated business,” he said during the Thursday call. “It’s a business that has a lot more complication under the covers when you really kind of dig in than you might imagine from a distance, and I think that they’ve done a great job building a high-quality product over time. So, we think that they’re a really natural partner.”

Garcia noted that both partnerships are in their early days, so any further details about the financial and scale ambitions would be shared over time.

“We’re very excited about their potential, but it’s early and there’s a lot of work to do to get those to where we would like them to be,” he said. “So, we’ll be working hard to try to get those to the place that we want.”




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