Carvana vending machine spins used car industry on new path

Middle Tennessee residents may have noticed a unique new structure while commuting on Interstate 65: a five-story glass tower filled with used cars.

The building, a fully-automated vending machine for cars, is owned by online auto retailer Carvana and is the first of its kind in the country, although the fast-growing Arizona-based company expects to bring the concept to many more markets.

Tennessean photojournalist Shelley Mays and I experienced the vending machine firsthand Wednesday during a tour of the facility with Carvana’s co-founders, Ernie Garcia and Ryan Keeton.

What I learned: Carvana is working hard and fast to disrupt the used car industry.

From its user-friendly website that allows customers to buy a used car online in less than 20 minutes, to encouraging customers to share their experience on social media in order to slash marketing costs, Carvana wants the car-buying process to be fun, easy, less costly and transparent.

“I think the inspiration for Carvana — and I wish it were more complicated — but I think what it came down to was there are a lot of people that aren’t very happy with the current way of buying cars, and people are changing their behaviors pretty significantly in buying cars,” Garcia said.

Consumers are buying into the concept. Carvana’s revenue jumped from $4 million in 2013 to $45 million in 2014. The company is on track to more than triple that this year, Garcia said. Carvana is quickly expanding into new markets, fueled by more than $300 million in funding.

Carvana’s model allows customers to browse its selection of company-owned used cars online — there are 1,700 accident-free vehicles in the system — with high-res photos and 360-degree virtual tours. People can zoom in on any imperfections on the car. Once a vehicle is selected, customers can get financing, trade in a vehicle, sign contracts and schedule the car for delivery or pickup. Then there’s a seven-day test drive period.

Similar to online eyewear retailer Warby Parker, which now operates some brick-and-mortar showrooms, Carvana learned that some customers want to see the vehicle in person and pick it up at a designated facility.

Enter the car vending machine.

Carvana has been operating in Nashville since 2014, but the vending machine tower is a new facility that took years to develop with architects and engineers from around the world, Garcia said. Carvana opened its first vending machine in Atlanta, but it doesn’t have a tower.

The Nashville facility, at 4270 Kenilwood Drive off I-65’s Armory Drive exit, holds 20 vehicles, and customers can schedule a day and time for pickup after selecting their vehicle through Carvana's online process.

The facility is made mostly of glass and has a sleek blue and white lobby that reminds me of an Apple store, but with only a few iMac computers and flat-screen televisions.

Upon entry into the lobby, a customer receives an oversized coin that they place into a machine, cueing music and illuminating the vehicle tower. The coin triggers an automated process where a machine spins and grabs the vehicle, bringing it to a track that delivers the car to one of three bays. The customer can then test drive or leave with their new car.

It’s an elaborate show of technology, but Keeton said an upfront investment on the design and engineering saves major costs on labor and real estate. Those savings are then passed along to consumers, saving them $1,500-$2,000 per vehicle, Garcia said.

“I think what we’re trying to create is a fun way to pick up your car that is also metaphorically representative of what we are as a brand. … It’s fun, it’s easy, it’s automated, and the customer is in control,” Garcia said.

Keeton said Carvana will subsidize $200 in airfare and arrange transportation from the airport to the Nashville facility for customers who live outside of Tennessee but want to pick up their car at the vending machine.

Carvana’s Nashville facility operates from 9 a.m. to 7 p.m. Monday through Saturday.

Reach Lizzy Alfs at 615-726-5948 and on Twitter @lizzyalfs.