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Feb 10, 2017,  by Allianz Partners Business Insights

America’s second-hand car market turns to vending machines

America’s second-hand car market turns to vending machines :

An American online car dealership has cut out the salesman by using vending machines to sell its used cars, a system that could well revolutionise the market.

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Founded in 2013, internet car dealership Carvana has adopted a novel approach to selling cars, enabling its customers to select and buy the vehicles of their choice online and then collect them from latest-generation vending machines that take the form of eight-storey glass towers containing as many as 30 cars.

Having opened the first such vending machine in Nashville, Tennessee, a year ago, the company has just launched another in Houston, Texas.





Buying cars has never been so much fun


The system involves buyers making their choice online and then placing a special coin into the slot of the vending machine and selecting their vehicle, which is then automatically retrieved and delivered to them on one of four delivery platforms.

Carvana is hopeful that the new system will transform the second-hand car market, with company CEO and co-founder Ernie Garcia saying that their aim is to make buying cars “fun”. Taking direct inspiration from the success enjoyed by Amazon, the vending machine aims to do away with dealerships, which according to Garcia bump the price of cars up by an average $400 and add an extra $1,400 to prices to cover employee costs.

We may be a few weeks removed from the launch of our #Houston #CarVendingMachine, but our team is still elated with this 8-story wonder!

— Carvana (@Carvana) December 27, 2016


Gone in seven minutes


To prove that its prices are fair, Carvana allows its customers to make online comparisons, and also makes things easier for prospective buyers by offering reconditioned cars, financing and trade-ins. As Garcia explained, it all means that customers can buy the car they’re looking for in seven minutes flat. The company started out by providing free next-day delivery, but thanks to its vending machines it now gives customers the chance to go and collect their purchases themselves, cutting delivery costs in the process. If they are not satisfied with their car, buyers have seven days in which to return it and receive a full refund.

The innovative approach seems to be working, with Carvana doubling sales figures this year to $350m. It’s hard to say at this stage whether its vending machines are a gimmick or a stroke of marketing genius. Refusing to release any figures on their Nashville facility, Carvana has merely said that customer reaction has been “incredibly positive” and that it aims to set up several more such facilities in the very near future. 





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