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Carvana acquires Adesa US auction business for $2.2B to jump-start used car sales – TechCrunch


Carvana acquires Adesa US auction business for $2.2B to jump-start used car sales – TechCrunch

Carvana, the online used car marketplace, has agreed to buy Kar Global’s Adesa U.S. auction subsidiary for $2.2 billion in cash, an acquisition aimed at adding another revenue stream as well as a network of physical sites that could help bolster operations.

The acquisition announcement, which was made alongside a fourth-quarter earnings report, marks a transition for the pure online business into a more traditional physical car dealer. 

Today, Carvana customers can use the company’s mobile or web app to shop, buy and finance their vehicle purchase. Those vehicles can either be picked up at one of its 30 multi-story car vending machines or delivered directly to a customer’s home. Carvana also operates 15 inspection and reconditioning centers where vehicles are evaluated and spruced up before sale. Customers can also sell their vehicles to Carvana.

The additional revenue and physical footprint that Adesa U.S. offers appear to be far too appetizing and too big of an opportunity for Carvana to ignore. And it comes at an opportune time.

Carvana sold 113,016 vehicles and generated $3.75 billion in revenue in the fourth quarter, a 57% year-over-year sales growth. But that YoY figure masks a tapering of growth towards the end of 2021. In the third quarter, Carvana sold 111,949 retail units on $3.5 billion of revenue.

Carvana has yet to reach GAAP profitability. Its losses actually widened year-over-year  $182 million in the fourth quarter from from $154 million in the same period last year. However, its total losses for the year narrowed considerably. The company reported net losses of $287 million in 2021, an improvement from $462 million the previous year.

Adesa has 56 physical sites, which Carvana will also be able to use to inspect and recondition the vehicles its sells online. Carvana will continue to operate Adesa U.S.’s physical auctions while simultaneously developing the sites to include Carvana’s standard retail inspection, reconditioning and logistics capabilities, the company said in its letter to shareholders.

Carvana said Adesa U.S. reconditioning operations…

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