Buying a car online is one of the few aspects of e-commerce that may give people pause. It's often second only to buying a home as the single largest expense for most consumers, and having that much money involved can deter from choosing to buy a car online. Carvana is one of the relatively few startups out there attempting to change people's minds, and the Phoenix-based company is now targeting the Washington, D.C. area.
"We know that people need to feel comfortable about where their car is coming from," Carvana chief brand officer Ryan Keeton said in an interview with DC Inno. "They want to know that that the car is handled carefully along the chain of custody."
Carvana isn't the first platform for buying and selling cars to debut in the D.C. area. California startup Shift arrived in January with a $20 million investment in Virginia for an engineering center. The critical difference is that Shift never holds ownership of the vehicles, just facilitates the buying and selling, whereas Carvana actually owns the car once it is sold before selling it on. But the platform does act more like a peer-to-peer system than going to a used car lot, which as advantages.
"We always make sure we get all the approvals we need to operate in any state, but it's not like a regular marketplace," Keeton said. "Because it's peer-to-peer, the regulations are different."
Once someone picks out a car to buy, Carvana helps out with arranging financing, and delivers the car as soon as the next day. It checks over any car it buys before selling it to make sure it is functional, but customers also have a week to return the car. In terms of selling, Carvana claims buyers get an average of $1,681 savings compared to the Kelly Blue Book value. D.C. will be the company's fifteenth market.
"There's a lot of tech savvy early adopters around D.C.," Keeton said. "No one else has our tech or can do the kind of [online] financing we do. There's a lot of potential customers here."
Since its launch in 2013, Carvana has raised $300 million, and is on a more than $350 million run rate for 2016.
