Even as used-vehicle sales and revenue are on the rise, dealers are facing increased competition.
The industry's most prominent new competitor in the used-vehicle market, online startup Carvana, debuts at No. 8 on Automotive News' list of the top 100 retailers based in the U.S. ranked by used-vehicle retail sales. Carvana retailed 94,108 vehicles in 2018, more than double what it sold the year before. The company was not on the 2017 list.
Since it went public nearly two years ago, Carvana has been moving headlong into new markets to sell about 15,000 vehicles for sale on its website. It offered as-soon-as-next-day delivery in 85 markets at the end of 2018. That number had risen to 115 markets by mid-April.
Carvana's rapid growth has the industry taking note. Carvana CEO Ernie Garcia calls it just the beginning.
Most consumers "still don't even know exactly what is meant when you say you 'buy a car online,' " Garcia said on the company's fourth-quarter earnings call.
As consumers gain awareness of Carvana and get "more comfortable with what we do," Garcia said, the company's sales could skyrocket. Garcia predicts the online retailer can reach 2 million units in sales, which would put it far ahead of any other retailer in Automotive News' top 100.
That goal of 2 million vehicles generally will result from reducing prices and making the buying experience less cumbersome, Garcia has said. With the largest player having just a 1.8 percent market share, the used-vehicle market is fragmented and wide open to more competition, he notes.
The largest player Garcia was referring to is CarMax, which once again finished first on the top 100, with a 7.5 percent gain in used-vehicle sales to 721,512. It was followed by Penske Automotive Group, which posted a 12 percent increase to 282,500 used vehicles. AutoNation rounded out the top three with a 1.5 percent bump, retailing 237,722 used vehicles.
Lithia Motors rose to the No. 4 spot, with sales of 151,234, swapping places with Group 1 Automotive, which had sales of 147,999 used vehicles for the No. 5 spot. Sonic Automotive Inc. and Hendrick Automotive Group followed in the No. 6 and No. 7 spots. After Carvana, Asbury Automotive Group Inc. and Larry H. Miller Dealerships rounded out the top 10.