Carvana’s Strategic Leap: First New-Car Dealership Acquisition Signals Market Expansion

Carvana, the pioneering online used-car retailer, has taken a groundbreaking step by acquiring its first franchised new-car dealership. This bold move signifies a fundamental shift in its business strategy, opening doors to a broader customer base and positioning the company to compete directly in the new-car market.

Carvana Acquires Jerry Seiner Chrysler-Dodge-Jeep-Ram in Arizona

On February 28, 2025, Carvana finalized its acquisition of Jerry Seiner Chrysler-Dodge-Jeep-Ram, a dealership in Casa Grande, Arizona, strategically located about 45 miles south of the company’s headquarters in Tempe. The newly rebranded Casa Grande Chrysler-Dodge-Jeep-Ram will officially reopen under Carvana’s ownership on March 3, 2025, with all 41 employees retained, ensuring operational continuity.

This acquisition marks Carvana’s first direct foray into franchised new-car sales, a notable departure from its established business model, which has exclusively focused on buying, reconditioning, and selling used vehicles through its innovative e-commerce platform.

Carvana’s decision to enter the new-car dealership space could reshape the company's long-term trajectory. While it has dominated the online used-car retail sector, its expansion into franchised sales allows it to capitalize on manufacturer incentives, financing options, and factory-backed warranties—key advantages that traditional dealers have long leveraged.

The move also raises industry-wide questions:

• Is Carvana positioning itself for a broader dealership expansion?
• Will its digital-first model disrupt the new-car sales process, much like it did with used vehicles?
• Can it successfully navigate franchise regulations and manufacturer agreements?

Carvana's venture into franchised dealerships echoes a similar experiment by CarMax, the nation’s largest used-car retailer. CarMax initially entered the new-car market through a Chrysler franchise but later pivoted exclusively to used-vehicle sales, shutting down its new-car operations by 2021.

While CarMax ultimately withdrew from new-car sales, Carvana appears to be taking a more calculated approach. If this initial acquisition proves successful, it could expand further into franchised dealerships, creating a hybrid model that merges online efficiency with traditional dealership benefits.

Carvana’s expansion comes at a time when the automotive industry faces market volatility. The used-car sector has seen pricing fluctuations, driven by supply chain disruptions, fluctuating consumer demand, and interest rate uncertainties.

By adding new-car sales to its portfolio, Carvana diversifies its revenue streams, hedging against the unpredictable nature of the used-car market. The company could also gain access to automaker incentives and subsidized financing programs, strengthening its competitive position.

However, the move also presents operational challenges:

• Franchised dealerships operate under strict manufacturer agreements.
• Pricing, inventory, and warranty policies differ from used-car sales.
• Carvana must balance its digital-first approach with the traditional in-person dealership model.

Carvana's acquisition signals a pivotal moment in its growth strategy. By integrating new-car sales, it has the potential to bridge the gap between online convenience and dealership-based services.

This move could lead to several possible future scenarios:

1. Further Dealership Acquisitions – If the Casa Grande dealership performs well, Carvana may acquire additional franchised dealerships, expanding its footprint in the new-car sector.
2. Hybrid Retail Experience – Carvana might blend its e-commerce model with physical locations, offering test drives, financing, and service packages previously unavailable to online-only buyers.
3. Competitive Shift in the Auto Industry – If successful, this strategy could pressure traditional franchised dealers to enhance their digital sales channels, leading to a more competitive and customer-centric retail environment.

With the purchase of its first new-car dealership, Carvana is testing uncharted waters in the franchised automotive retail sector. While this strategic expansion presents challenges, it also unlocks significant opportunities to diversify revenue streams, enhance customer offerings, and strengthen Carvana’s market position.

As the industry watches closely, the success of this move could redefine Carvana’s long-term business model—potentially transforming it from a purely digital used-car retailer into a hybrid powerhouse in both new and used vehicle sales.

This acquisition is not just another dealership purchase—it is a potential turning point for Carvana’s future. Whether this is the beginning of a major transformation or a one-off experiment, it represents a calculated risk that could shape the next phase of digital automotive retail.