How Does Carvana Make Money?

Carvana is an online platform on which users can shop for used vehicles.  The cars can either be picked up or be delivered straight to their doorstep. 

Most vehicles on the platform are sourced from national used-car auctions and directly from customers who sell their car to Carvana.

One of Carvana’s key differentiators are its gigantic car vending machines, which customers visit when picking up their vehicle.

Carvana, which is headquartered in Tempe, Arizona, was founded in 2012 by Ernest Garcia III, Ryan Keeton, and Ben Huston.

Garcia III is the son of billionaire Ernest Garcia II who founded car reseller DriveTime, which is where Carvana was first incorporated under. 

Carvana spun out of DriveTime in 2014 and went public 3 years later. The founders had previously raised $960 million in funding.

In 2021, Carvana generated an eye-popping $12.8 billion in revenue. But how does the firm actually make money? 

Flipping Cars

Carvana makes money from the sale of cars offered on its platform. It turns a profit whenever the firm is able to sell a car for more than it was bought for.

Financing

Carvana allows customers to finance their vehicle purchases. It simply collects interest on the loans it issues.

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