Buying a car is a hellish process. The reward for spending hours researching the right one is a trip to a local dealership — an experience that assaults the nerves in such a way that it's only rivaled by appointments with the dentist. But what if buying a car was easier than that? What if it was as easy as, say, a vending machine?A few years ago, a company called Carvana followed in the footsteps of companies like CarMax by trying to move the car buying experience completely online. The process of purchasing a car on Carvana's website includes all the steps that normally take place at a dealership: getting approved for and selecting financing, selecting a warranty, and signing the contract. It's a process that, in an interview with The Verge, Carvana CEO Ernie Garcia is quick to point out takes many Carvana customers 20 minutes or less.
This left customers with just one dealership interaction: choosing pickup or delivery. And Garcia says that, more often than not, Carvana customers were choosing pickup — so much so that a subsequent pickup store in Atlanta was a rousing success. Now, though, Carvana is adding some spice to that experience.
"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," Garcia says. The result? A five-story, fully-automatic vending machine building for cars just outside of Nashville, Tennessee. It's like the automated car delivery experience offered by Volkswagen in Germany, except this one is coin-operated.
"The experience itself is exactly a vending machine experience," Garcia says. "The customer even gets a customized, oversized coin that they drop into a slot." The coin triggers a robotic arm, which goes up and grabs the car that the customer purchased online. When the car comes down, it's transferred to another robot that drives the car down a hallway and parks it in a bay, where the customer receives their purchase. After that, Garcia says, customers can be walked through the features on their car, or even take it for a test drive.
In fact, Garcia says the funds aren't actually transferred until the customer takes the final receipt of the car and drives it off the lot. And even when that happens, Carvana offers a seven-day, "no questions asked" return policy. "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 says. He calls the "test-to-own" period "way more useful to a consumer than four right turns around a dealership."
The bet is that the Carvana vending machine will be expensive up front, but inexpensive going forward. By employing fewer staff, leasing less acreage, and carrying fewer cars, Carvana drastically lowers the overhead. It also allows them to sell cars for up to $2,000 less than most dealerships. Garcia's not sure sure whether the vending machine's customers will be local to Nashville or if they'll travel great distances for the experience — the company is offering $200 toward airfare and "white glove" service from the airport if they do — but he does sound confident that Carvana will eventually open up others around the country.
"I think it’s going to be an incredible customer experience," Garcia says. "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."