Carvana, the used car behemoth, began acquiring new car dealerships in early 2025, causing concern among Chrysler Dodge Jeep Ram dealers about the potential impact on their businesses. Signs are emerging that Carvana’s entry into the new car market is leading to heightened competition across several channels.
The Carvana Stellantis store in Casa Grande, Arizona, for example, sold 998 vehicles in June, according to data provided to Car Dealership Guy. This is a significant increase from the store’s previous monthly sales volume of seldom more than 50 vehicles.
Carvana-owned dealerships are marketing and selling far outside their designated market area, which is not part of the traditional dealership business model. Nick Chivinski, VP of marketing and strategy at Savvy Dealer, noted that Carvana is selling vehicles in distant markets, including Pennsylvania, where a Chrysler Dodge Jeep Ram store noticed Carvana selling three Dodge Ram pickups in their market area from its Arizona store.
Chivinski explained that Carvana is using Google vehicle ads to target local demand in distant markets, allowing its inventory to appear at the top of search results for specific vehicles or configurations. This strategy is enabling Carvana to compete against other dealers of the same brand in different market areas.
Carvana Disrupts Local Markets
While this practice is not illegal, manufacturers typically discourage selling outside of a dealership’s designated marketing area. Local dealerships are concerned that Carvana’s approach is unfair, as they have invested in local advertising and are committed to providing customer service and support in their area.
Cuyler Owens, CEO of Widewail, which monitors online reputation, noted that the fact that people are buying from Carvana stores in distant markets indicates a demand for a more frictionless sales experience. However, he also pointed out that this approach may compromise the core promise of owning a franchise, including building relationships with customers and winning their trade-in business.
Widewail’s analysis of online comments for Carvana-owned dealerships found that while the sales experience improved, the service experience declined. For example, the Carvana CDJR store in Sacramento, California, saw a drop in negative sales mentions but a rise in negative service mentions.
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Review response rates also declined significantly in Carvana-owned stores, with some locations seeing a plummet to 0% from previous response rates of over 90%. This decline in service experience is concerning, as numerous studies show that franchised dealerships are already losing service business to independent repair facilities.
Prioritizing Sales Over Service
Steve Greenfield, general partner of Automotive Ventures, suggested that Carvana may not be prioritizing optimizing fixed operations, instead focusing on maximizing used car sales and trade-in purchases. As long as Carvana-owned dealerships are not losing money, Greenfield believes that Carvana may not be concerned about making individual stores profit-optimizing entities.
By acquiring Stellantis dealerships, Carvana is gaining access to closed manufacturer auctions, which feature vehicles directly from the OEM or its financing arm. John Murphy, founder and managing partner of Murphy Automotive Partners, noted that Carvana has been snapping up the majority of supply at these auctions, giving it a significant advantage in the used car market.
Carvana’s ability to access these auctions is particularly valuable at a time when used supply is tight. With over 500,000 more off-lease vehicles returning to dealers in 2026 compared to 2025, Carvana’s access to these auctions will provide it with a steady supply of used vehicles to sell.
Industry Impact and Adaptation
As the automotive industry continues to evolve, it’s clear that Carvana’s approach to selling vehicles is having a significant impact on traditional dealerships. While some may view Carvana’s approach as a threat, others see it as an opportunity to adapt and improve their own sales and service experiences.
Carvana will likely continue to expand its presence in the new car market, and its ability to access manufacturer auctions will provide it with a steady supply of used vehicles to sell. They will have to balance their focus on used car sales with the need to provide a good service experience to their customers.
