Why Carvana was hit with 180-day penalty in N.C. county

Carvana is barred from selling autos in Wake County, N.C., until early 2022 for violating motor vehicle dealer licensing laws in the state.

The state attorney's office said the online-based retailer failed to deliver title work in a timely manner, issued out-of-state, temporary tags for a vehicle sold in North Carolina and offered a vehicle for sale without a state inspection, according to terms of a settlement agreement.

The move followed a consumer complaint and investigation by the North Carolina Department of Motor Vehicles, a spokeswoman for the North Carolina state attorney's office said in an email to Automotive News.

"NCDMV began their investigation into Carvana's Wake County location in February 2021, based off of one complaint to NCDMV — a customer wasn't able to receive proper vehicle registration and plates to operate their vehicle lawfully in NC," state attorney spokeswoman Nazneen Ahmed said in the email.

The state attorney's office represented the NCDMV in negotiations with Carvana, including its appeal to the Wake County Superior Court.

For 180 days beginning Aug. 2, Carvana can't sell cars and trucks from its Raleigh location, where the state said the violations took place. Any vehicles at that location during the suspension period will have to be clearly labeled "Not For Sale," the agreement says.

Employees at the Raleigh location are still allowed to process title and vehicle registration paperwork from Carvana's three other licensed North Carolina "dealerships" during the suspension, the agreement says. Those locations are in Charlotte, Concord and Greensboro. Carvana has vending machines in Raleigh, Greensboro and Charlotte, and an inspection and reconditioning facility in Concord.

Carvana also is required to conduct a review of sales at all four locations in the state to ensure it's meeting titling and registration requirements.

The online retailer said in a statement it was "pleased that we were able to reach a solution with the North Carolina DMV.

"We're proud of the tens of thousands of North Carolina residents we've served since 2014, and are excited to continue delivering exceptional customer experiences there for many years to come."

Carvana has been expanding rapidly as an asset-light, online-based used-vehicle retailer. As of Aug. 4, the company offered as soon as next-day delivery in 301 U.S. cities. This month, the company reported its first quarterly profit.