Car ‘vending machine’ built to save on delivery costs

Blake Farmer Dec 4, 2015

Car ‘vending machine’ built to save on delivery costs

Blake Farmer Dec 4, 2015

The neighbors have fielded questions for months as the five-story steel and glass structure started to rise from the ground: “What is that?”

“We just reply that it’s a car vending machine,” said Anje Clay, who works at the import auto shop next door.

Now that the vehicle dispenser is operational, the online auto retailer can answer for itself. Carvana officials said their brick-and-mortar retail location in Nashville is more than a head-turning gimmick. This city got the first of this design, but the Phoenix-based company plans to put these vending machines in many of its markets, which currently stretch from Dallas to Raleigh-Durham. Atlanta has a more modest version.

“It’s surprisingly practical,” Carvana CEO Ernie Garcia said. 

German-engineered robotics pull the car over. 

Like any vending machine, this one takes coins. But they’re just for show. Drop the oversized Carvana token in the slot, and the gears start turning inside. A platform rises from the floor and stops at the correct level. The German-engineered robotics pull the car over. The SUV or sedan drops down, sliding over into a bay for pick-up by the customer.

Here’s why Garcia said this spectacle makes sense: with its by-the-interstate location and pulsating neon lights, the vending machine doubles as a Carvana billboard.

“If we can build an experience that customers talk about and are excited about, that actually saves us money that we can pass along to them again,” he said.

The second reason Garcia said this makes sense: it may save Carvana money on shipping, which is the make or break line-item for an online dealership.

“How do you manage that cost at the end of the day?” asked auto dealer Ben Freeland, who previously founded a website called Auto2Auto.

That company sold used cars online and transported them around the country. It went out of business during the recession, in part because of a hiccup in its delivery model.

“If you’re delivering to someone’s physical door, there’s complexities with urban markets, and just a lot of different things you’ve got to deal with as you go across the country,” Freeland said.

Home delivery costs Carvana about $200 per vehicle. The company is still offering that service — free of charge. But Garcia, the CEO, is hoping some buyers will be willing to drive to this central location instead. They still purchase the car online. But before they arrive for the pick-up, it’s loaded into the vending machine to create some drama around the transaction.

“When a customer comes here, they save us money by not making us go drive to them,” he said. “Then we’re able to take that savings and invest it in an experience that we think is really fun for them.”

Garcia won’t say how much this German-engineered car vending machine cost him to design and build, only that it was less than the typical start-up investment for a car lot. And, he added, there’s a repairman on standby.  That way, he never has to put up the dreaded “out of order” sign on this vending machine.

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