

AUSTIN, Texas—"Vending machines" don't usually conjure up excitement. At most, we've all fist-pumped when a second Hershey's bar falls down or perhaps snickered when a dive bar still sells cigarettes next to the Twix. But a new, modernistic addition to I-35 South's Motor Mile looks nothing like the neighboring car-stocked dealerships or various chain restaurants. Apparently, it's a "vending machine"—it just contains cars, not candy.

Used-car startup Carvana invited Ars out to its Austin facility this week to check out the company's recently opened "car vending machine." We profiled Carvana last year when looking at startups hoping to find alternative solutions to car buying . In short, the company sells used cars by purchasing its stock outright and selling directly to customers online. Vehicles go through a thorough 100-point inspection and get photographed before being listed. Customers in 20-plus markets can purchase cars for delivery.

Now three of those markets have a pickup option. The new Austin vending machine is Carvana's latest, while others are located in Nashville and Houston. Depending on local zoning laws and the physical space available, these machines can vary in size. For instance, Houston's is eight stories versus the five-story Austin structure.

The Austin Biz Journal reported this site measures 7,600-square-feet and is valued at $1.35M. Even with such a large endeavor, the company has gotten so good at building vending machines that a new one can go up fairly quickly. Carvana co-founder Ryan Keeton estimates the whole process takes roughly six to 18 months depending on locale specifics. He says Carvana already has more machines at various stages of planning.

The Austin site adheres to vending machine aesthetics—a large viewing window so you can see the merchandise, automated machinery to retrieve the goodies, even a coin slot to initiate it all. But the car machine varies a bit in practice. Carvana is a startup, not a traditional dealership. So the cars inside are not for sale. Instead, customers have already purchased them in advance online and have chosen on-site pickup rather than vehicle delivery.

This machine takes more operational time than the normal cash-for-candy setup, too. Carvana schedules customer pick-ups in 20-minute blocks throughout the day since vending can last roughly 11 minutes. Still, Carvana can deliver more product efficiently through the machine than they could through the company's at-home option.

"We can do four deliveries per day, and there's a cost of doing that," says Keeton. An employee devotes work time to be on the road, and the company must purchase larger delivery vehicles as necessary. But the vending machine sites remove the delivery logistics, and they need less staff and infrastructure than traditional dealerships. Keeton says customers save an average of $1,500 on a used car thanks to such aspects of Carvana's smaller overhead.

"Delivery requires an employee driving to you, but we can do a pickup every 20 minutes each day here," he says. "It's another lower cost, and because of that we can build stuff like this to ramp up the fun."

This red Camaro's journey

For customers, picking up is straightforward. When you arrive at the vending machine, a Carvana employee hands you a token and leads you to the coin slot to start. You choose your appointment on a touch screen, insert the coin, and then the machine takes over 'til your vehicle hits the delivery bay. After signing your MV-1 for title and tags, you're out the door.

Normally, outsiders aren't allowed inside the vending machine, but Carvana invited us behind-the-scenes for a peek on the morning before Austin's first official pick-up. The machine stores up to 20 cars within four five-story columns. And at the center of it all is an automated track the company calls its "robotrack."

Keeton compares this setup to an Amazon distribution center: cars are stored on metal pallets, the system knows whose car is stored in what position, and once a customer checks in, everything automatically springs to action. The robotrack rises and turns to the appropriate position, slides out the metal pallet to move the car back, and returns to the floor. The robotrack then transports the vehicle (still on a pallet) through a hallway to the delivery bay before rising slightly to ground level so a customer can get in and drive off smoothly. The facility's floor-to-ceiling windows allow you to watch the whole process from the outside, but Carvana has fitted the interior with cameras so customers receive a 15- to 30-second personalized video of theirs cars going through the vending machine upon purchase.

Ars didn't buy a red Camaro for me, but Carvana was happy to manually run the vending machine through an employee UI customized for mobile usage. The video above gives you an idea of the experience (and Carvana has its own promotional footage for sharing, too). Thus far, Carvana notes increased sales in markets with vending machines. But beyond the financial gains, Keeton thinks this solution also help put customers back in that familiar car-buying mindset even if Carvana's process is notably different.

"There's an ingrained mentality when you buy a car—even though I may not enjoy going to a dealership because it'll take time, I'm going to their turf," he says. "It's convenient to bring a car to a customer, but it might feel to some like the dealer is showing up at your house. But once people come here, they have a comfort. They can check out the car, and if they don't like it they can walk away. It helps with the psychology."

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Nathan Mattise

Carvana's Austin Car Vending Machine is open Monday through Saturday from 9am to 7pm CT. As with all Carvana sales, there is a seven-day post-purchase test period for returns if buyers are unsatisfied. For interested customers who live 100 miles outside of the Austin metropolitan area but want to pick up at the Vending Machine, Carvana's press release notes the company will even subsidize $200 in airfare and arrange transportation from the Austin airport. More info available at carvana.com.

Listing image by Nathan Mattise