The Automotive Troublemaker: Carvana Megasite

It’s the fifth Friday of the month heading into a holiday weekend, and we are covering how Carvana is launching a megasite, the latest on dealership buy/sell trends from Haig Partners, and a dealership delivery that ended in an arrest.

Carvana is transforming the ADESA Kansas City location into its first "megasite," blending auto auctions with vehicle inspection and reconditioning. This move is set to create 200 new jobs in Belton, Missouri, further expanding Carvana’s retail and wholesale operations.

• The megasite model is unique to Kansas City; other locations like ADESA Buffalo and Portland will remain online-only auctions, even though they were previously announced as incorporating recon operations.

• Carvana acquired the 56-site ADESA network in 2022 and is now integrating it into its operational infrastructure.

• The site began operations in August, with roles including technicians and logistics associates.

• Brian Boyd, SVP of Inventory at Carvana, stated, “As Carvana transitions to its long-term phase of driving profitable growth, we are excited to further tap into the power of our infrastructure by bringing inspection and reconditioning capabilities to more ADESA sites."

Haig Partners has released its Q2 2024 Haig Report®, detailing a shift in the auto retail marketplace from record profits and high dealership values. The report highlights a 32% decline in dealership profits and evolving trends in buy-sell transactions.

• Average dealership pre-tax income in Q2 2024 was $1.0M, a 35% drop from Q2 2023.

• The number of dealerships sold in Q2 2024 is on track to decline 11% from 2023, but 2024 is still on track to be the 4th most active year for buy/sells.

• Blue sky values remain elevated but are down 11% from the end of 2023, still more than double pre-pandemic levels.

• Public auto retailers significantly reduced spending on domestic dealerships, with Lithia being the only active buyer.

• Quote from Alan Haig - “We know that many dealers who wanted to grow were sitting on the sidelines over the past few years as they waited for prices to fall. Now is the time to get up!”

• PRODUCER’S NOTE: “I spoke with Derek Garber of Haig at the NAMAD Annual Meeting and he said there are still a lot of stores for sale, but they aren’t the high producers that we saw in 22/23. It’s still a good volume of buy/sell activity, but lower valuations.”

A viral TikTok video from Gossett Kia in Memphis shows a seemingly typical vehicle delivery that takes a surprising turn when the customer is arrested for identity theft.

• The customer, William Hayes, 63, faces charges of forgery and attempted theft, accused of using a deceased person's identity to fraudulently buy two Kia Tellurides worth $158,885.

• The video begins with the usual celebratory scene of a car purchase, including applause and congratulations, then abruptly cuts to the customer being handcuffed by police.

• The video, tagged with #justiceisserved, has gone viral on TikTok with over 15 million views, highlighting the dealership’s role in the arrest.

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