A car dealership called Carvana in Nashville, Tennessee created a 20-minute or less online process for purchasing a car, as opposed to the usual mind numbing and nerve wracking day long negotiations with a car salesman. The online experience includes getting approved for and selecting financing, selecting a warranty, and signing a contract. The only dealership interaction customers have is either pickup or delivery of their new vehicle. Customers mostly choose pickup, which is why Carvana created a five-story, fully-automated vending machine building where customers actually use a coin to receive their new car. The coin triggers a robotic arm, which retrieves the car that the customer purchased online. When the car comes down, it is then transferred to another robot that drives the car down a hallway to the parking bay where the customer receives their purchase. The customer is then walked through the features on their new car and can take it for a test drive. The funds are transferred when the customer takes the final receipt of the car and drives it off the lot. Carvana also offers a seven day “no questions asked” return policy. The hope is that the Carvana vending machine will be expensive up front, yet cost less overhead in the future due to employing fewer staff, leasing less acreage, and carrying fewer cars. The car vending machine also allows them to sell cars for up to $2,000 less than most dealerships. Carvana is planning on opening up more vending machine car dealerships throughout the country.
Carvana CEO Ernie Garcia said, “We knew that if [customers] chose to pick up the car we would save some money, and so we could invest that money in giving them a really, really great experience. The experience itself is exactly a vending machine experience. The customer even gets a customized, oversized coin that they drop into a slot. We even proactively call them on the sixth day and remind them that their return policy is expiring to ensure that they’re happy with the car.” Garcia calls the “test-to-own” period “way more useful to a consumer than four right turns around a dealership. I think it’s going to be an incredible customer experience. And I think if we’ve got the car that they’re looking for, and we’re selling it for $1,500 to $2,000 less, and we offer a purchase process that takes 20 minutes, and then you get to go to a vending machine and watch your car moonwalk to you? I think people are going to respond to that.”
