Carvana's Unlikely Comeback and What It Means for Traditional Dealers

Look, I will be the first to admit that I wrote Carvana off. In early 2023, when their stock was trading under five dollars and the financial press was openly speculating about bankruptcy timelines, I told anyone who would listen that the vending machine gimmick was over and that brick-and-mortar would outlast another Silicon Valley fantasy. I was wrong — not about the fundamental value of physical dealerships, but about underestimating what a company can accomplish when it gets religion about unit economics and stops trying to buy market share with investor money.

Carvana reported record adjusted EBITDA in Q2 2024, and their GPU — gross profit per unit — hit numbers that would make most franchise used car departments genuinely jealous. According to their earnings call, they achieved a retail GPU above $7,000 while simultaneously growing unit volume by over 30 percent year-over-year. For context, the NADA average for franchise used vehicle departments typically hovers around $2,500 to $3,200 in gross per copy, depending on the market. The restructuring that Ernest Garcia III forced through in late 2022 and 2023, which included cutting roughly 4,000 employees and renegotiating their debt load, turned out to be exactly the kind of painful medicine the company needed.

Now here is the part that should make traditional dealers uncomfortable, and I say this as someone who has spent his career on physical lots. Carvana's reconditioning centers are running at a level of operational efficiency that most dealerships have not even conceptualized. They standardized their inspection process across facilities nationwide — J.D. Power's 2024 Used Car Satisfaction Study ranked Carvana second overall in buyer satisfaction, ahead of CarMax and well ahead of the average franchise dealer. They are offering seven-day return policies, transparent pricing without negotiation, and a delivery experience that my twenty-four-year-old nephew described as "like ordering from Amazon but for a car." That last part matters more than some of us want to admit, because the generational shift in how people want to buy things is not slowing down.

The takeaway is not that physical dealerships are dying — I do not believe that for a second, and the numbers do not support it. The takeaway is that operational laziness and resistance to digital tools are no longer survivable strategies. If your website still looks like it was built in 2016, if your internet leads take four hours to get a response, if your trade-in process requires a customer to sit in a chair for ninety minutes while someone "talks to the manager," you are handing business to competitors who have figured out that respecting the customer's time is not optional anymore. I have been visiting dealerships since the early 2000s, and the ones thriving in 2024 are the ones that stopped treating the internet as a threat and started treating it as the front door.

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