NASHVILLE -- Ernie Garcia Jr. has a big glass gumball machine full of cars overlooking the interstate on the south side of Nashville.
The just-opened structure dispenses used cars to customers -- but it also serves as eye candy to an even bigger oddity on today's automotive landscape: Garcia's company is not selling the used cars here at the gumball machine. He is selling them online.
Customers merely drive to Nashville to pick up what they already purchased on their home computer. The Nashville structure will be followed by a slew of similar delivery buildings in other cities, all built as glass-and-metal dispensers, tall as a two-story house, built by the German parking system contractor Nussbaum Parking GmbH.
Garcia, a former New York financial manager, launched Carvana in Phoenix in 2012 as a solution to a disadvantage that most used-vehicle retailers probably didn't realize they had: Their overhead costs.
Garcia compares his costs to financial data from his prospective competitor and fellow segment-disruptor, CarMax. According to CarMax's public financial data, it spends close to $25 million to build one of its mega-lot sales locations, which sell an average of 340 used vehicles a month. Garcia anticipates Carvana will move two to three times that volume through each vending machine location.
"So when you look at what we're spending for this, it costs us less than 5 percent of what a traditional set-up would cost us per sale."