Buying a used car can potentially feel like a good deal until the paperwork begins.
You’ve got the advertised price, the trade-in negotiation, financing terms, and sometimes an unexpected fee that changes what you thought you’d be paying. For Americans already struggling with vehicle costs, those surprises can make a stressful purchase even worse.
But Carvana CEO (CVNA) Ernie Garcia believes a major change could be coming to the way Americans buy cars.
During the company’s October 28 earnings call, Garcia described how artificial intelligence could play a role in streamlining a complicated transaction into a simple decision.
His comments also underscore an intriguing possibility for buyers accustomed to negotiating prices and navigating dealership fees. That said, the question remains if that convenience could translate into a more attractive deal.
Carvana CEO predicts a major change for used-car shoppers
Buying a car typically involves several steps, but Carvana CEO Ernie Garcia believes AI could potentially take that experience much further.
During the company’s October 28 earnings call, Garcia described a future in which AI agents could find suitable vehicles, calculate trade-in values, apply for financing, and present customers with their down payment, monthly bill, and delivery options.
Instead of working through each step separately, buyers may receive a nearly complete proposal and decide whether to accept it. Garcia said the technology could “effectively reduce digital friction to zero while leaving physical friction largely unchanged.”
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In other words, AI might eliminate much of the shopping hassle, even though someone still needs to inspect, prepare, and deliver the vehicle.
And Carvana believes its existing business gives it an advantage.
“If we were starting from scratch today, we would build Carvana,” Garcia told analysts.
The company’s powerful earnings report helps explain his confidence.
Carvana sold a record 217,385 retail vehicles in Q3, up 39% from a year earlier, while revenue jumped 42% to $8.04 billion. Those results become even more impressive considering the fact that the management described the broader used-car market as roughly flat.
Rather than waiting for more Americans to buy cars, Carvana is attracting a larger share of existing shoppers.
Moreover, its net income also climbed to $483 million, while adjusted EBITDA reached a record $800 million.
But Garcia’s comments point to something beyond convenience.
An AI assistant capable of comparing actual purchase costs could also reveal something shoppers have struggled with for years, which is how much a vehicle really costs once dealer fees, add-ons, and financing enter the picture.
Why car prices, dealer fees and financing remain a problem
I’ve bought a car online, and I’d tell you first-hand that the car’s advertised price doesn’t always tell the whole story.
A car might look affordable online, only for documentation fees, mandatory add-ons, or financing terms to change the final amount.
Federal regulators are trying to make those surprises harder to hide.
In September, the Federal Trade Commission issued guidance clarifying that advertised vehicle prices must include mandatory dealer charges, including required documentation fees and add-ons. Government-required charges are generally excluded.
The guidance explains existing legal obligations rather than introducing a blanket ban on dealer fees. Garcia believes greater transparency could help consumers compare competing offers.
“It aids in price discovery and value understanding for our customers, and we think that’s great,” he said.
That’s doubly important when affordability is already stretched.
The average used-car asking price reached $27,235 in September, its highest monthly level since December 2022, according to Cox Automotive data cited by Autotrader.
Meanwhile, Edmunds reported that Americans financing used vehicles in the third quarter borrowed an average of $30,703, paid 10.6% annual interest, and faced monthly payments averaging $582.
Consider what a one-percentage-point rate reduction could mean.
On a hypothetical $30,703 loan lasting 70 months, lowering the APR from 10.6% to 9.6% would save approximately $15 per month, or about $1,080 over the loan’s term.
Garcia said the company has lowered customer interest rates by more than one percentage point over two years. However, executives acknowledged that some increases in benchmark rates are still passed through to borrowers.
For shoppers, the lesson is straightforward: compare the full purchase price, APR, and total loan cost, not just the monthly payment. AI could make those comparisons easier. But even perfect price transparency cannot make expensive cars or high borrowing costs disappear.
What Carvana’s shopping vision means for buyers and the stock
For Carvana investors, Garcia’s comments indicate that the company’s next growth opportunity would come from making online car shopping even easier.
On top of that, the retailer already has momentum.
Despite selling more than 217,000 vehicles last quarter, Garcia said Carvana still holds just over 2% of the used-car market. That leaves considerable room to gain customers without requiring the overall market to expand.
And management expects Q4 retail sales to increase again, assuming economic conditions remain stable.
But there’s a catch. More shoppers discovering Carvana through AI doesn’t automatically mean the company can serve them.
Executives acknowledged that the number of vehicles immediately available on its website isn’t growing nearly as quickly as sales. Expanding inspection, reconditioning and delivery capacity remains essential.
Growth is also expensive.
Although adjusted EBITDA reached a record $800 million, Carvana’s adjusted EBITDA margin slipped to 10% from 11.3% a year earlier. Higher fuel and logistics expenses added pressure, while efforts to offer customers better financing terms also affected profitability.
The company expects full-year adjusted EBITDA toward the upper end of its $2.7 billion to $3 billion guidance range.
For shareholders, the challenge is turning sales into sustainable profits. For buyers, Garcia’s vision promises something different which involves fewer obstacles between finding a car and understanding the deal.
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