Carvana Inspection Center; Elyria, Ohio

For what seems like a nearly a year, I have noticed that a big construction project is happening about 30 minutes east of me.  I can just slightly see the whole thing being built from the hyw.  In the earliest days of the construction, I figured it was some big steel building likely to be used for manufacturing or warehousing.  I thought nothing more of it.  I then noticed from what can be barely seen from the road that the payment is HUGE, extending far beyond the building.  I then began to think it might be a shipping terminal for a trucking company.  Lots of room for parking semi trailers.   This also just happens to be a couple of highway exits away from my local IAA auctions.  I was then most convinced that it could be either a new place for IAA (but that seemed unlikely) or it could be a new dealership style auction lot.  Something like a Manheim.  

It was just earlier this week that I really had time to take the highway exit to investigate...  

Turns out it is a Carvana Inspection Center; much to my surprise.  This place is HUGE.

Internet photos.  

What is shown in these January photos as dirt out back is now all paved.  It an autox'ers wet dream but likely never to be used for such.  

On-line articles tell me that the property is 150 acres with a 200,000 sq ft building.  Total project cost $23 million of which $5.8 million was the purchase price of the land.  I feel like 200,000 sq ft is an understatement of the size.  A Walmart Super Center tend to be 150-190,000 sq ft.  This more looks like 4 Walmarts in size.  

My understanding is that all that happens at this facility is reconditioning of used car.

I'm not sure how many facilities there are like this in the US.  I did find where there is another in Charlotte, NC.

Seems they have a similar size in Greenfield, Indiana (west Indy suburb) too.  They must have or are planning similar in every market.  It just struck me as a huge place. 

Maybe I'm not grasping just how many cars Carvana is moving!   

In reply to John Welsh :

Very interesting. I have been curious at the growth of Carvana especially with the pandemic side effects of remote car shopping and increased used car prices. I wasn't sure if they used a distributed collection model by contracting with independent shops or dealers to process cars. I see they aggregate their purchases for processing. I have wondered if their model will be taken over by standard dealers adopting similar no fuss marketing strategies. 

My last new car purchase (2019) was extremely less hassle than my prior new car (2014). The finance team didn't give me the feeling that they were trying to funnel me into their biggest profit finance source. Instead I got an email of ALL the finance options the dealer had with pros and cons for my situation and I chose to lease. That is all that I think Carvana has over most dealers, transparency of the financing and sale process. The only place where my last purchased lacked was in the delivery as we gave them two days and still showed up and they couldn't find the second key for 10-20 minutes. (the kid that moves cars left it in a corner of the service bay that he camps out in) So if dealers get away from the opaque financing model and goes towards a here is everything in plain view for you model Carvana may start to stall out. 

In reply to Advan046 :

Am I reading that you are saying Carvana is transparent with financing.  Actually, financing is one of the things about Carvana that scares me the most.  

Carvana's CEO is Earnest Garcia III, the son-in-charge of convicted felon Earnest Garcia II.  Ole Daddy-O is the man behind Drivetime the nations largest Buy-Here-Pay-Here (BHPH) dealer chain that has a reputation of predatory lending including an 8 million dollar fine.

My real fear of Carvana and it's model of only financing through it's subsidy company is that it wants to make all (or at least more) car sales BHPH.

Forbes article

Carvana is perfect for the people that dont care what they are getting.

My carvana purchase was declined without even a test drive.  The condition of the car was absolutely misrepresented. A broken headlight, tail light, baseball sized dent in the A pillar and quite a bit more all not mentioned.   Pictures showed a rock chip we couldnt even find. Also, the "lost" the car for a week, I had to reschedule, then go to their Depot because a guy called out sick.  

At a car show out in the sticks sunday, It looks like 2 Carvana cars were denied.  Saw a carvana flatbed do one way with  a car, half hour later it went the other way with the same car.   Then It happened about an hour later..

There business model just seems poised for failure to me. Or, it did before the pandemic.

(Insert theory where Carvana created the Kung Flu to advance their business)

In the last week I've seen more Carvana transport trucks (mostly empty) in my area than I have in the preceding year. I suppose there is a market for people buying cars who give it as much thought as choosing a new toaster on Amazon. As a person in the camp of not ever wanting to set foot on a franchise dealer lot again, I can see the appeal. But I wouldn't buy a car that way. Kind of like getting a mail-order bride. She may look good in the photos but how miserable will she be to live with?

I don't know whats up with misrepresented cars, but I think the Carvana/Vroom business model is going to be very successful in the long run.

Looking at this place, it really looks so much like an Dealer Auction place.  I know that CarMax runs its own "dealer only" auctions out the back of some of their bigger locations, like 100 locations nationwide.  This is a way that CarMax offloads its trade ins and slow moving inventory while by-passing the typical dealer auctions like Manheim.  

I looked and Manheim Detroit (a very big location) is a 200 acre property.  This Carvana is a 150 acre property.  

I really wonder if Carvana will be in the business of auctioning off, to "dealers only" some of their inventory.  With this big refurbishing operation, they could easily slap some lipstick on a pig and sell it to a BHPH lot style dealer.  

In reply to John Welsh :

I understand and thanks for the extra knowledge. I was more talking about transparent as in they "seem" to put the numbers clearly out for the potential buyer. Maybe as you say it is just more effective sales methodology. But I find talking to a salesman who then has to go into some back room to determine financing creates an aura of distrust versus putting it out on the table and allowing the customer to see more of it thus feeling is of a more transparent relationship.