Tempe could become the home of Arizona’s first used-car vending machine. Yes you read that right, a car vending machine.
The vending machine would be operated by online used-car dealer Carvana, which already has vending machines in Nashville, Houston, Austin, San Antonio and Dallas. The company has a smaller version of the concept in Atlanta as well.
Now the Arizona-based company is looking to place a car-vending machine on a vacant lot at the northwest corner of Gilbert Drive and Scottsdale Road, north of Loop 202. The entire car buying experience takes place online.
Carvana officials are asking the Tempe City Council to allow the company to build the glass, nine-story vending machine and allow automotive retail on land that was designated to be a general industrial district. Company officials note the footprint is much smaller than a typical auto sales lot.
The council will vote on the project Thursday. If approved, the company will begin the building permit process. No time is yet set for the project’s opening.
Carvana is also in the process of moving its corporate headquarters from Phoenix to Tempe, which is expected to open in June at 1930 W. Rio Salado Parkway.
HOW IT WORKS
Those looking to purchase a car from the company go to carvana.com, find the car they want and buy it. The company makes 360 virtual versions of the car from composited photos so a prospective buyer can examine every inch of it, including the interior from a phone or computer.
Once purchased, the buyer has two ways to get their new ride.
Have it delivered. Carvana boasts being able to deliver within 20 minutes in certain areas.
Go to a Carvana vending machine, insert a custom-made coin and get the car.
The way the machine works, the buyer inserts an oversize coin, which triggers a robotic arm to grab the car. Another robot then drives the car out of the vending machine to the owner.
However, a prospective buyer can’t just go down and buy a car from the vending machine whenever they fancy. The vending machine is only for people who have already purchased a car and have chosen the option of using the machine for pick up.
After purchase, there is a seven-day money-back guarantee period in case the vended vehicle isn’t what was expected.
The Arizona company was established in 2012 as an online used car dealership that would ship the car to the buyer’s home.
The company aims to “disrupt the auto industry” by providing a unique car-buying experience that leaves a smaller environmental footprint, according to the company’s filing with the city.
Traditional car dealerships take up 10 to 20 acres of land, but the area Carvana is aiming to develop would take up 2 to 3 acres, according to the company.
The company claims to be the most heavily funded private online auto dealer and offers a variety of vehicles from smart cars costing about $5,000 to a 2015 Maserati for $53,000.
The company recently went public but shares lost more than one-quarter of their value dropping from an initial price of $15 each to close at $11.10 on the first day.
Carvana’s CEO Ernie Garcia III and his father, DriveTime founder Ernie Garcia II, hold a 96 percent voting stake in the company. Some media reports suggested that such tight control over Carvana might have turned off investors.
The company was still able to make $210 million in stock sales, which will be used to repay debt and for general corporate purposes.
Carvana has been growing rapidly, with widening losses, as it invests heavily in growth. In 2015, for example, the company lost $36.8 million on revenue of $130.4 million. In 2016, it lost $93.1 million on $365.1 million in revenue. Vehicle sales nearly tripled from 6,523 in 2015 to 18,761 last year.
Carvana boasts an employee base of just over 1,000 and operates in 21 metro locations.