Carvana's new LI 'car vending machine' site rises; struggling company mum on opening date

Carvana has hit a bumpy road this year, with employee layoffs and declining sales, but the nation's largest online used-car retailer appears to be moving forward with opening its first Long Island customer center and "car vending machine."

The company’s newly built Carvana Customer Center, which includes a 75-foot high, 40-by-40 foot wide “car vending machine,” looks to be nearly finished at 2 North Ave. in Uniondale, in an area formerly called East Garden City. Carvana bought the 1.9 acres of land for $9.7 million in December 2021.

Carvana Co., which is based in Phoenix, did not respond to Newsday’s requests for comment, so it is unclear when the Uniondale facility will open.

But the project seems to be moving forward as planned, a Hempstead town representative said. 

“They haven’t stopped any movement. It’s active. As far as we know, they’re working on the process still,” he said.

However, Carvana would not have to notify the town if it halted its plans to open the facility, he said.

Carvana already has a presence on Long Island, where it has a logistics hub on Grand Avenue in Deer Park.

Carvana’s so-called car vending machine in Uniondale is a tower that can hold 24 cars — four cars on each of the six floors, according to the Hempstead representative.

A new one-story building at the site is 6,540 square feet, while the lot has 116 parking spaces for employees' and customers' vehicles, as well as cars being sold.

On Oct. 17, Carvana submitted its final survey to the town, which approved it Nov. 28, the Hempstead representative said.

The survey is a comparison of the constructed project to the building plans Carvana submitted to make sure the project is in compliance.

The survey is one of the five items Carvana needs to obtain a certificate of occupancy, the Hempstead representative said. Also needed are inspections for the fire marshal, plumbing, electrical and final architect certification, he said.

The Uniondale property that Carvana bought is adjacent to a retail development where a 57,000-square-foot Whole Foods Market opened in November 2020.

The property was sold by Joup LLC, which is an affiliate of Midwood Investment & Development, the Manhattan-based real estate firm that redeveloped a former Pepsi bottling site for the Whole Foods store.

Focused on the wrong things?

Carvana has faced some serious issues this year, including thousands of employee layoffs, declining car sales, a stock price that has plummeted 98% since last year and rumors of an impending bankruptcy filing.

“They’re doing horribly,” said Seth Basham, who covers Carvana as a hardlines retail equity research analyst at Wedbush Securities, an investment firm in Los Angeles.

In May and November, Carvana announced layoffs totaling 4,000 workers, or 19% of the 21,000 full- and part-time employees who were working for the company at the end of last year.

Total gross profit in the third quarter was $359 million, a decrease of 31% from the same period last year, according to a Carvana earnings report.

The company’s stock price closed at $3.83 on Wednesday, compared with $233.76 a year earlier.

Carvana’s woes can be attributed to several factors, including a slowdown in the used-car market overall, following high demand for vehicles in 2020, 2021 and earlier this year amid the COVID-19 pandemic, industry experts said.

But now the demand environment has flipped, partly because of consumers’ concerns about the economy, high inflation and rising interest rates affecting monthly car payments, Basham said.

Used-car prices are down 14% since last year but monthly payments on car loans are $100 more on average than they were last year, he said.

Also, Carvana has had some operational missteps, including expanding too quickly, Basham said.

“They were so focused on growth and not operations that things fell by the wayside,” he said.

The company also took on a lot of debt with its $2.2 billion purchase of Adesa’s U.S. physical auction business for vehicles in May, he said.

Founded in 2012, Carvana was a trailblazer that showed that an online used-car sales model could work. But it is facing more competition from brick-and-mortar retailers, such as CarMax and AutoNation, that have added online sales components, said Michael Baker, managing director and senior research analyst in the Boston office of D.A. Davidson Cos., a Great Falls, Montana-based financial services firm.

A marketing tool

Carvana's customers can choose to have their purchased cars delivered to their homes or they can pick up their vehicles at one of the company’s 34 car vending machines, according to the company’s website.

For the vending machine, "the customer simply drops their custom coin (which they receive upon arrival) into the car vending machine’s coin slot, which then illuminates the coin receptacle and activates the automated vehicle delivery system," according to the company’s website.

Most of the cars Carvana sells are delivered to customers’ homes, but the vending machines are a great marketing tool, Baker said.

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.