Car Buyers Pay Thousands Extra at Carvana to Skip Traditional Dealership Hassles

Many car buyers are choosing to spend significantly more money at Carvana just to avoid the frustrations of traditional dealerships, according to recent data.

The online retailer's no-haggle, digital-first approach has proven so appealing that some customers are paying over $4,000 more for the same vehicle they could get elsewhere.

Data from Catalyst IQ, an automotive marketing firm, shows Carvana advertised the Ram 2500 at an average of $4,533 more, about 6.2 percent above other Stellantis stores in the same markets. The Jeep Compass was priced $1,528 higher on average from May 7 to August 5.

"Carvana is able to command in many cases premium pricing at a time when pricing is already historically high," said Rick Wainschel, Catalyst IQ's vice president of analytics. "That says something about their practices and processes and how consumers are reacting to them."

Carvana's strategy isn't uniform, though. Some models were priced lower than competitors, including the Jeep Grand Wagoneer at $2,989 cheaper and the Jeep Grand Cherokee at $145 below average.

The approach appears to be working. Carvana's new-vehicle stores sold 69 percent of their inventory within 90 days, compared to just 39 percent for other Chrysler-Dodge-Jeep-Ram stores in the same areas. Carvana says its new-vehicle sales business is profitable but hasn't disclosed exact figures.

A company spokesperson said Carvana "has always offered transparent, no-haggle pricing that is informed by market dynamics and observed customer demand."