Carvana's first 'car vending machine' in New York State opens in Uniondale

Carvana has rolled out a “car vending machine” on Long Island, bringing the signature marketing tool of the nation’s largest online used-car retailer to New York State for the first time.

The Phoenix-based company has run into serious financial challenges over the last year, but it has moved forward with launching two multimillion-dollar car vending machine sites recently — one opens in Uniondale Wednesday and one opened in Denver in February.

Located at 2 North Ave., in an area formerly called East Garden City, Carvana’s new Long Island facility includes a 75-foot-high, 40-by-40-foot wide car vending machine; a one-story, 6,540-square-foot customer service building; and a lot with 116 parking spaces for employees’ and customers’ vehicles, as well as cars being sold.

The eight-story tower in Uniondale, which can hold 27 vehicles, is Carvana’s 35th car vending machine, the company said.

“Vending machines are this really cool, futuristic way to pick up your vehicle,” Carvana spokesman David Klemow said.

All Carvana’s cars are sold online, but customers can choose to have their vehicles delivered to them or pick up their purchases at car vending machines. 

The vast majority of Carvana’s customers choose to have their vehicles delivered, but the vending machines are a great marketing tool, 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.

Customers who go to the towers for pickups receive oversized coins that they drop into the machines to start the automated vending process, Carvana said.

"With the customer looking on, the car vending machine then retrieves the vehicle from the tower and brings it directly to a delivery bay," according to the company.

The Uniondale site will employ about 20 people initially, most of them customer service representatives, Klemow said.

Carvana introduced “as-soon-as-next-day delivery” in New York State in 2018, and has sold more than 50,000 cars in the state since then, he said.

Strong sales on Long Island since then spurred the company to put a vending machine on the Island, he said. “We just found a really emphatic response from residents in that area … you can really see a hot spot around Long Island,” said Klemow, who declined to disclose Long Island sales numbers.

The company also declined to give specifics on how a car vending machine affects local sales, but said it does have a benefit.

"We have seen an increase in market penetration for cities that have vending machines compared to those that do not," Carvana spokeswoman Emily Adams said.

In December 2021, Carvana bought 1.9 acres in Uniondale for $9.7 million from Joup LLC, an affiliate of Midwood Investment & Development, a Manhattan-based real estate firm. The property is adjacent to a retail development where Midwood developed a Whole Foods Market that opened in November 2020.

The vending machine, towering over the Meadowbrook State Parkway in the high-traffic, retail-heavy Roosevelt Field trade area, will serve the used-car retailer well, said Kenneth Schuckman, president of Schuckman Realty Inc., the Rockville Centre firm that marketed the property for Midwood.

Every chain "has their top three or four stores ...in this marketplace," and  the sales volumes "warrant tenants paying rent that they would never pay anywhere else in America,” he said.

Aside from the Uniondale site, Carvana opened a logistics hub in Deer Park in June 2018. Employees there complete inspections and detailing of vehicles before delivery to customers.

'A really hard year'

Founded in 2013, Carvana was a trailblazer that showed that an online used-car sales model could work. 

But the company has had a series of major issues in the last year, including announcing the layoffs of 4,000 workers, or 19% of the 21,000 full- and part-time employees who were working for the company at the end of 2021. It also faces declining used-car sales in general amid high inflation and rising interest rates.

Carvana’s woes are partly attributable to it expanding too quickly, according to some analysts.

The company’s stock price plummeted 98%, from $233.08 to $4.74, over the year that ended Dec. 30.

 “2022 was a really hard year for us by any measure. It was a year that provided experiences we never wanted to have. It was a year we didn’t foresee. While experiences you don’t foresee and always hoped to avoid are difficult, they are often where you learn the most,” Carvana CEO Ernie C. Garcia III said in an annual report released last week.

The company announced some financial improvements this month.

Last week, Carvana projected first-quarter losses would be between $50 million and $100 million, compared to the $348 million lost in the quarter last year.

The company also said it was continuing to reduce its vehicle inventory and was restructuring its debt.

Carvana’s stock closed at $7.87 Wednesday.

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.