In a bold move emblematic of the evolving automotive retail landscape, Carvana, the online used car retailer, has inaugurated its second vehicle vending machine in San Diego County, situated off Interstate 8 in Mission Valley.
The new facility, a futuristic six-story glass tower capable of housing 19 cars, stands on a 6-acre property formerly owned by John Hine Mazda, a dealership with a 64-year history in the location. The September 2021 acquisition included two parcels, located at 1545 and 1551 Camino Del Rio South in Mission Valley.
Carvana’s foray into San Diego began with its first vending machine in Escondido in 2022. The company’s focus on price transparency and convenience has been a cornerstone of its business model, attracting buyers and sellers seeking an alternative to traditional sales methods.
The pandemic era significantly boosted Carvana’s profile, as lockdowns and social distancing mandates made online car shopping a necessity rather than a convenience. The company capitalized on this shift, coupled with the heightened demand for used cars due to new car supply constraints. However, the post-pandemic period wasn’t without its challenges for Carvana. After rapid expansion, the company faced bankruptcy concerns, leading to a significant debt restructuring, workforce reduction, and expense cuts.
These measures bore fruit, as evidenced by Carvana’s report of its first-ever profit in the fourth quarter of 2023, with a net income of $450 million, a stark contrast to the $1.59 billion loss in the previous fiscal year. This turnaround is particularly noteworthy in the context of San Diego’s declining used car market, which saw a 3.5 percent year-over-year drop in the fourth quarter of 2023, according to a report in The San Diego Union-Tribune.
The market dynamics for used cars have evolved since the pandemic, with values beginning to normalize yet remaining above pre-pandemic levels. According to Ivan Drury, Director of Insights at Edmunds, the average used car sold for $27,297 in January, significantly higher than the pre-pandemic average of around $20,000, the report states. Despite this, Drury acknowledges the appeal of Carvana’s online, used car buying experience, highlighting its convenience factor.
Carvana’s latest San Diego vending machine is part of a broader expansion strategy. It is the fifth such machine in California and the 39th in the United States. This expansion underscores the company’s adaptation to changing consumer preferences and market conditions.
