Introducing the First U.S. Car Vending Machine

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July 14 (Bloomberg) -- Ernie Garcia, founder and president of Carvana, explains how the company allows customers to finance and purchase a vehicle entirely on the Internet. He speaks with Pimm Fox on "Taking Stock." (Source: Bloomberg)

And president, ernie garcia.

Detail for people the idea behind carvana.

What is supposed to do?

That core, carvana is like a car dealership instead of having a physical dealership that can cost up to $25 million to build and $3000 per sale to run, they can go to the website for the process.

You can figure out financing and inspect the car in great detail.

They can sign contracts and schedule delivery.

We deliver the car to their home and they have seven days to test drive it where they are comfortable instead of the five-10 minutes at a dealership.

We wrap all that with about $2000 lower cost.

We think for consumers it is an exciting offering.

Tell us about your time at drivetime so people get a sense for your own experience.

Drivetime is the seventh largest retailer of used cars in the nation, it's selling about 100,000 used cars give or take.

I got a lot of exposure to the retail process.

I got a good sense of what customers like and do not like in cars.

I think we try to pay attention to where value is being added.

Consumers were paying a lot of money for things they did not value.

From that, the concept for carvana came to fruition.

We benefit a ton from the infrastructure the drivetime brings to the table.

We are able to acquire cars efficiently, we have world-class operations.

We are able to scale quickly.

It has been a great ownership.

-- partnership.

What is the idea of a vending machine for automobiles?

There are two ways a customer can get their car.

We can deliver to their door or sometimes customers are very anxious to get the car and there might not be a delivery slot available.

We operate a vending machine which is much like it sounds.

They get a unique code.

They drive up the machine and type of the code.

The garage door opens and the car is behind that.

They have all the benefits that they would if they go to the door.

Where do you get your inventory?

We are buying inventory the same way that any other dealership group out there is.

We are buying them from auction, off lease, off rental, customer trade-ins.

We have access to a wide array of inventory.

Give us a sense of how people can save if this were the model that many people adopted.

We believe conveniently that this is a good proposition for customers.

They save about $1600 on price which is meaningful compared to the $15,000 average used car transaction.

There is no dealer fees.

The average customers than four and a half hours at the dealership.

They spend nine hours at dealerships overall.

We have had customers go through our process in as little as 10 minutes.

It is generally described as a test drive but 11% of people do not test drive cars.

60% only drive a single car and the car only gets -- the drive only lasts five minutes.

You can drive our cars for seven days.

Four and a half hours and no headaches.

Describe the economic value of buying a used car compared to a newer model.

I think that is a personal choice for everyone, but a used car on average is a steep depreciation there.

You can get a car that is a year or two old that is 70% the price that it would cost new.

There are roughly three times as many used car transactions as there are new car transactions in the u.s.. that is a great market for us to attack first.

The market is enormous.

45 million cars -- use cars are sold a written there are 50,000 dealers operating largely the same model.

We think we are the most differentiated model out there.

What kind of car do you drive?

Don't do that to me right now.

I drive a reasonably nice one.

This text has been automatically generated. It may not be 100% accurate.

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