The Intersection 4-24-22

Carvana threat coming from inside the house

Carvana

Some phrases immediately make a dealer’s skin crawl.

“You’re not getting any more allocation until August.”

“We’re launching an exciting new facility image program.”

“Here’s how much all the EV chargers you need are going to cost you.”

“Carvana is about to open down the street.”

For a while, Tesla was the big name that dealers worried about upending their business. These days, Carvana keeps many awake at night, too.

The glass-walled “vending machines” popping up in commercial districts around the country represent yet another obstacle in dealers’ efforts to keep their used-vehicle lots populated with enough inventory.

Now, Carvana is about to take over auction sites that many automakers and dealers use to offload customers’ trade-ins and lease returns. And that has a lot of them looking for alternatives in order to avoid providing a revenue stream to the enemy, as we explain in a story on Page 1 of this week’s issue.

Carvana’s pending acquisition of ADESA U.S., expected to close in May, would give the online used-vehicle seller 56 additional sites where it could inspect and recondition incoming inventory. Adding those locations would give Carvana a presence within 200 miles of 94 percent of the U.S. population.

That’s near ubiquity for a company that many consumers had never heard of until fairly recently.

It’s logical that automakers — some of which are starting their own used-vehicle retail platforms specifically to ward off Carvana — and dealers wouldn’t want to give the company business, just as any other retailer in town wouldn’t want to direct its customers to Amazon or Walmart.

Of course, that doesn’t make Carvana just go away. Finding new ways to make buying and selling vehicles simpler and more profitable is key to keeping such challengers at bay. Many dealers are doing just that —and realizing that they might as well not help fund one of the interlopers at the same time.

Nick Bunkley   

BMW Group sales chief Pieter Nota

In Monday’s Automotive News:

Alfa Romeo Tonale

Alfa’s awareness tour: Alfa Romeo is taking its new Tonale crossover on the road to introduce it to the public. The plug-in hybrid will make a series of appearances, such as at a Florida park, Formula One races and Monterey Car Week in August. The plan is to “start with some grassroots kind of stuff,” Larry Dominique, Alfa Romeo’s senior vice president of North America, tells Automotive News. “We’re going to go into individual markets.”

Audi Urbanspere

Inside the Urbansphere: The Audi Urbansphere, the last of three design concepts from the German premium brand that look to a future with advanced automated driving, has a familiar exterior shape. But inside the EV is a different story. The three concepts lay out a future in which the cabin serves as an entertainment venue, and the Urbansphere takes it to the extreme: The vehicle has an adaptive stress relief program that uses facial scans and voice analysis to determine how passengers are feeling and offers personalized suggestions for relaxation. For refreshment, a center console swivels upward with a water dispenser and glasses. We take a look at these features and more.

Lithia Mercedes-Benz store

Lithia Motors’ net income skyrockets: Lithia Motors Inc.’s first-quarter net income more than doubled, soaring 119 percent to $342 million. The expanding retailer saw increases in new-vehicle and used-vehicle sales, strong gross profit per vehicle and rising average vehicle selling prices.

McLaren logo

New McLaren boss? McLaren is said to be considering Michael Leiters, the former head of technology at Ferrari, as its next CEO. Leiters stepped down from Ferrari in December as part of a leadership reorganization under new CEO Benedetto Vigna and reportedly is one of the main candidates being evaluated for McLaren’s top job. 

Magna, LG plant plans

LG-Magna JV’s new Mexican plant: Canadian supplier Magna International Inc. and South Korea’s LG Electronics Inc. broke ground on a factory in Ramos Arizpe, Mexico, that will supply parts for General Motors’ EVs, the companies said. The 260,000-square-foot plant will employ about 400 people.

April 30, 2009: Chrysler LLC files for bankruptcy.

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