Autos, Business

This Father And Son Became Billionaires Selling Cars From Vending Machines

This Father And Son Became Billionaires Selling Cars From Vending Machines

Carvana Co. makes buying a car as easy as buying a candy bar from a vending machine. The online upstart sells cars out of vending machines. And now after years of losses shares of Carvana are on the way up — way up.

After its stock fell as much as 57 percent in late 2018, the Tempe, Arizona-based company has seen its stock double this year.

The rebound has drawn scrutiny from Carvana’s skeptics. On paper, though, it’s restored the fortunes of the company’s father-and-son team, the Garcias.

Run by father and son team, Ernest Garcia II and Ernest Garcia III, Carvana lets customers select from more than 15,000 cars. It takes as little as 10 minutes to complete the process. Buyers can either pick up their car at more than a dozen vending machines located nationwide.

The two Garcias are now worth a combined $6.7 billion, according to the Bloomberg Billionaires Index. They are worth more than Dallas Cowboys owner Jerry Jones, legendary movie director Steven Spielberg, or hedge fund manager John Paulson.

Carvana went public two years ago this month.

It’s been a long climb for the father and son. In 1990 the elder Garcia has been convicted of fraud in 1990 for a small role in the Charles Keating savings-and-loan scandal. “He avoided prison by testifying against Keating, received three years of probation and has since had his civil rights restored, according to regulatory filings. He went on to make a fortune selling used cars and providing auto loans to subprime customers via his company, DriveTime Automotive Group Inc.,” Bloomberg reported.

Called the Amazon of used cars, Carvana it a record high of $70.82 in September 2018. But the company kept racking up losses, and shares tanked, dropping to about $30 in mid-December.

“Today, the stock has nearly erased the loss, fetching $66 on Friday. Since its initial offering, it’s soared more than four-fold,” Bloomberg reported.

And revenue has been climbing. “Revenue more than doubled in 2018 to just under $2 billion as the number of used cars sold rose in nearly the same proportion to 94,000. The gross profits made on each unit sold rose 35 percent to $2,090,” The Motley Fool reported.

Carvana has a goal of selling 2 million vehicles a year.

People in the industry have finally seems to taking Carvana seriously.

“The industry’s most prominent new competitor in the used-vehicle market, online startup Carvana, debuts at No. 8 on Automotive News’ list of the top 100 retailers based in the U.S. ranked by used-vehicle retail sales. Carvana retailed 94,108 vehicles in 2018, more than double what it sold the year before,” Automotive News reported.