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Online retailer Carvana debuts car vending machine in Novi

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The eight-story Carvana car vending machine in Novi can accommodate 27 vehicles. (Photo: Daniel Mears, The Detroit News)

Novi — Online vehicle retailer Carvana is expanding its presence in Metro Detroit with the opening Thursday of one of its signature “car vending machines.” 

The machine, which online shoppers can visit to pick up their vehicle, is located at 26890 Adell Center Drive. The eight-story brick-and-glass tower is capable of holding 27 vehicles. 

Carvana, which offers a fully-online car shopping experience with an inventory of more than 15,000 used vehicles, first entered the Detroit market in 2017 when it began offering at-home delivery.

The Phoenix-based company says the addition of a physical location is a way to accommodate customers who prefer picking up their purchases in person, as well as a marketing opportunity to make more people aware of it.

Here’s how the vending machine works.

Carvana customers visit the retailer’s website to shop for a vehicle, then complete the financing and purchase (customers can use the platform to trade in their current vehicle, too). Vehicles listed on the site go through a certification process that includes a 150-point inspection and verification that there have been no reported accidents or frame damage. 

Customers can opt to have the vehicle delivered to them as early as the next day. Or, they can select a time to pick it up from the vending machine.

If they choose to do that, they are met at arrival by a Carvana employee who guides them through using the vending machine. The car descends down the tower, and it’s the customer’s to take home. Carvana has a seven-day return policy, so buyers have some time to decide if they like the vehicle.

The vending machine is open from 9 a.m. to 7 p.m., Monday through Saturday.

The installation, which is Carvana’s 26th in the country and its first in Michigan, comes as Carvana reports record demand. Indications suggest the novel coronavirus pandemic has accelerated the move toward online car shopping and driven demand for more-affordable used vehicles.

“I think there is generally a shift in consumer behavior that they do want to do more transactions online,” said Amy O’Hara, associate director of communications for Carvana. “We were purpose-built for that.”

“Now that we’re in the throes of the pandemic, we’re finding that customers do really appreciate our touch-less delivery; the fact that you can shop online from home; and you can speak to a customer advocate on the phone or you can chat in, but everything is done virtually,” she said.

Carvana was founded in 2012 and went public in 2017. Earlier this year, it expanded to operate in 100 new markets, bringing its total market presence to 261.

The company has yet to post a quarterly profit, but its stock soared last week on news that the company is forecasting record sales and breakeven results in the third quarter. The company will report third-quarter financial results Nov. 6.

The company’s stock (which closed at $223.06 per share Wednesday), is up nearly 140% from where it opened at the start of the year. 

And, Carvana sold more than 55,000 retail units in the second quarter, a 25% increase from the second quarter of 2019. Last year it sold about 200,000 cars; its goal is to reach 2 million sales per year.

“The second quarter started at the peak of COVID-19 related economic disruption and ended with structural shifts in customer preferences leading to the strongest demand we have ever seen,” company executives wrote in a note to shareholders about the second-quarter results. “We are currently seeing more demand for our offering than we’ve ever seen in our history.”

Carvana’s uptick occurred as automakers experienced a sharp drop-off in new-vehicle sales due to the pandemic.

Carvana leaders attributed the company’s strong results to the fact that “buying a car online has suddenly become normalized.”

The results also speak to the condition of the used-car market, where demand increased over the summer as car buyers looked for good value amid a widespread economic downturn (although sales are now “slowly modestly,” according to Cox Automotive).

“From the standpoint of demand, it is clear in our view that COVID-19 is prompting consumers to seek out used cars, and (Carvana) is a key beneficiary of this trend,” Piper Sandler analyst Alexander Potter said in a recent research note, according to Bloomberg.

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