Online used-car retailer Carvana, whose marketing strategy includes mechanized automobile-dispensing “vending machines,” will soon be rolling into Fishtown, according to a city industrial-development agency document.
The web-based auto dealership is leasing the block bounded by Richmond, Front, Wildey, and Leopard Streets from developer Core Realty for a Philadelphia outpost, following locations in Houston, Nashville, and Atlanta.
Officials with Philadelphia's industrial-development agency voted last week to authorize the sale of a segment of the block to Core, which already owns the rest of the one-acre property. The transaction must also be approved by City Council.
Phoenix-based Carvana LLC is among a raft of car-selling businesses taking to the web in an attempt to disrupt the stubbornly brick-and-mortar used-vehicle dealership model.
Others include Vroom Inc. of Grand Prairie, Texas, which — like Carvana — buys and resells used autos, and San Francisco-based Shift Technologies Inc., which matches used-car buyers with sellers.
Carvana stores the bulk of its used-auto inventory away from — but within easy delivery distance of — the densely populated areas where most customers live, much like fulfillment centers run by Amazon.com Inc. and other online retailers, company co-founder Ryan Keeton said in an email.
But the company has also begun building more centrally located facilities where customers can pick up online purchases themselves. At its Nashville and Houston locations, modeled after vending machines, cars are automatically conveyed to waiting customers through multi-story glass structures.
“Carvana is revolutionizing the car-buying process for today’s consumer by eliminating the pressure, hassles and hidden fees that come with buying from a dealership,” the company said in a release when it began serving parts of Florida last year.
But it’s been quiet about its plans for Philadelphia.
“While we do have plans to bring car vending machines like the ones launched in Houston and Nashville to as many markets as possible over the next few years, we're not able to confirm any specifics at this point,” Keeton said.
The resolution approved last week by the Philadelphia Authority for Industrial Development authorizes Core Realty’s acquisition for $131,000 of a 3,600-square-foot section of the Fishtown block where Carvana plans to operate.
The online dealership has a 10-year lease with Core for the full space, where it intends to build “a one-story parking structure to facilitate customer pickup for vehicles purchased online,” according to the resolution.
The property, between elevated sections of the Market-Frankford Line and Interstate 95, is also to include a public dog park along Wildey Street, the resolution said.
Core Realty’s founder, Michael Samschick, did not return a call seeking details.
Online videos of Carvana’s Nashville pickup site show customers dropping oversized coins into a slot to summon vehicles previously purchased online. The cars are then dispensed from the facility on automated platforms.
In regions served by Carvana, but without pickup sites — including the Pittsburgh and Washington areas — the company offers free delivery. It also subsidizes plane fares to cities with “vending machines” for customers living outside its delivery areas.
Carvana estimates that its prices are about $1,680 lower than Kelley Blue Book values. Customers can also return vehicles within a week of purchase, inasmuch as the online transactions provide no opportunity for test drives.
But Ken Elias, a Scottsdale, Ariz.-based partner with automotive consultancy Maryann Keller & Associates, said all that might not be enough to make most auto shoppers comfortable with buying vehicles they’ve seen only on digital screens.
He added that used-car sales are often complex transactions that are better handled by specialists who staff conventional dealerships, such as vehicle appraisers for trade-ins and loan officers.
“A car purchase is not like buying things from Amazon,” Elias said. “You have to go see the car and smell the car.”
As for the “vending machines"? “It’s a marketing gimmick,” Elias said. “That’s all it is.”