Key Takeaways:
Carvana sold more than 700 new vehicles in May at its first Stellantis dealership, dwarfing the prior average of 30 to 50 monthly sales.
The company spent $171 million to acquire seven Stellantis dealerships as its entry into new-car sales, a business that generates far thinner margins than used cars but unlocks lucrative parts, service and financing revenue. Carvana is applying its online-only sales model to the new-car business, replacing traditional showroom staff with couches and a small team for test drives and browsing assistance.
New and used vehicles generated 76% of AutoNation's first-quarter revenue but only 22% of gross profit, according to the company's financial filings. Parts and service combined with finance and insurance produced 24% of revenue and 78% of gross profit. Carvana offers online financing through loans backed by Ally Financial and plans to keep its dealership service bays operating as normal.
The Casa Grande, Arizona, store's May performance — 700-plus new vehicles versus a prior average of 30 to 50, per Stellantis data shared with CNBC and reported by the Wall Street Journal — suggests the model can scale. Carvana's $70 billion market capitalization already makes it the most valuable auto retailer in the US, ahead of AutoNation and Lithia Motors.
The company's used-car business has staged a dramatic turnaround from near-bankruptcy in 2022 to record profitability. In fiscal 2025, revenue rose 48.6% year over year to $5.6 billion, net income surged 570% and earnings per share climbed 431.4% to $4.22, beating the $1.10 consensus. Thrive Capital, the venture firm founded by Josh Kushner, netted a $522 million gain on its Carvana investment, more than quadrupling its initial outlay.
Carvana's long-term roadmap targets 3 million annual unit sales and a 13.5% adjusted EBITDA margin within four to nine years. The company holds about 1.6% of the US automotive retail market, a fragmented $1.3 trillion industry with 16,990 new-car dealerships. Each new-car store Carvana acquires adds a shipping point for its online used-car business and a source of trade-in inventory.
The new-car strategy shifts Carvana from a pure used-car disruptor into a hybrid model that captures higher-margin service and financing revenue. Investors will watch whether the company expands beyond Stellantis dealerships and how quickly it can replicate the Arizona store's results across its seven locations.
This article is for informational purposes only and does not constitute investment advice.
