- What is Carvana, and how does Carvana work?
- How does Carvana make money?
- Used Vehicle Sales
- Wholesale Sales
- Other Sales and Revenues
- Carvana’s profit and revenue
- What is the Carvana business and revenue model?
- Carvana’s funding and market cap
- Carvana’s Subsidiaries, Acquisitions, and Exits
How does Carvana make money? Here is a full, in-depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the Carvana business model, their year-over-year revenue, and how Carvana works.
What is Carvana, and how does Carvana work?
Carvana is an eCommerce platform for buying and selling used cars.
Founded in 2012 by Ernest Garcia III, Ryan Keeton, and Ben Huston, Carvana has sold more than 587,409 used cars since the company’s inception, making them the second largest seller of used cars in the county.
How Carvana works is: Once a customer finds the car they want, they can then begin to fill out their information. Once everything is filled out, the customer can choose to schedule a pick-up or delivery of the vehicle. If for any reason the customer doesn’t like the vehicle, they have 7 days to return it.
How does Carvana make money?
According to Carvana’s Investor News Release, the company sold 244,111 cars in 2020. So how does Carvana make money off of all those sold vehicles?
Below is a breakdown of how much money Carvana makes and its revenue model. Including all revenue streams and how much they charge for their services.
Here are the 3 ways of how Carvana makes money (in 2021):
Carvana has a revenue model that makes money in three (3) ways – used vehicle sales, wholesale sales, and other revenues.
#1. Used Vehicle Sales
To no surprise, car company Carvana makes almost all of its money from selling used cars. In fact, $4.7 billion or 84.2% of Carvana’s total revenue came from the sales of 244,111 used cars in 2020.
The way this works is: Carvana first acquires used vehicles through customers who trade-in or sell them to them and through used-car auctions. Once acquired, Carvana goes through inspecting, reconditioning, and photographing the vehicles to prep them to be sold on their online marketplace. Carvana then sells those used cars and makes money on this by netting the difference between the acquisition and prep costs and the sales price.
Note: 84.2% of Carvana’s total revenue came from used car sales in 2020.
#2. Wholesale Sales
In addition to selling used cars direct to customers (B2C), Carvana also makes money by selling cars wholesale (B2B). These sales generated $445.2 million in revenue for Carvana in 2020.
Carvana makes money on this by selling the used cars purchased from customers at trade-in to wholesalers such as DriveTime through online auctions and on their wholesale platform CarvanaACCESS.
Note: Less than 8% of Carvana’s total revenue came from wholesale sales in 2020.
#3. Other Sales and Revenues
Carvana also makes money through a number of other sources besides selling used vehicles.
According to page 58 of Carvana’a 2020 Form 10-K, Carvava’s other sales and revenues are generated through “gains on the sales of automotive finance receivables Carvana originates, sales commissions on VSCs, and sales of GAP waiver coverage.”
Combined, these three (3) revenue streams totaled $400.7 million in revenue for Carvana in 2020.
Carvana’s profit and revenue
In 2020, Carvana reported $5.58 billion in revenue.
Note: Because Carvana Co. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Carvana’s publicly released financial reports, including annual reports, through Carvana’s investor section on their website.
What is the Carvana business and revenue model?
Carvana makes money through a few revenue models that they combine within their company, they are:
- Transaction based business model
- Business-to-business (B2B) revenue model
- Commission based business model
- B2B2C (partnerships) business model
- Mergers & acquisitions (M&A) business model
Carvana’s funding and market cap
According to Carvana’s Crunchbase profile, Carvana has raised $1.6 billion over 5 rounds and has a market cap of $56.96 billion as of September 2021.
Carvana’s Subsidiaries, Acquisitions, and Exits
To date, Carvana Co. has made a total of 2 acquisitions.