MW Carvana survived a debt crunch. Can it survive Amazon?

By Claudia Assis

Carvana's stunning rebound may face its biggest test yet

Amazon Autos is fresh from inking a deal with Ford Motor Co. to sell used Ford vehicles, but you wouldn't know it by looking at the stock of a key competitor: Carvana Co.

The deal with Ford last week didn't cause Carvana's stock (CVNA) to dive like it did when Amazon.com Inc. (AMZN) announced a similar deal with Hertz Global Holding's (HTZ) Hertz Car Sales in August.

In the months between the two deals, investors learned a bit more about Amazon Autos. And what they learned left them mostly unfazed about Carvana's, and to a smaller degree CarMax Inc.'s $(KMX)$, prospects, at least in the next one to three years.

"There's a longer learning curve in autos than in books," said Sharon Zackfia, an analyst with William Blair. "Every used car is a snowflake."

Carvana's 'moat'

The seemingly mundane task of taking photos of vehicles for sale is actually a carefully calibrated, standardized and coordinated operation aiming to make the consumer comfortable and the experience frictionless, she said.

Amazon has officially been in the business of selling new and used cars online since December 2024, when it launched Amazon Autos with Hyundai vehicles as part of a deal the two companies had cut a year earlier.

The tech giant has slowly developed the business, announcing the deal with Hertz and now the one with Ford $(F)$ for used cars. All along, it has touted convenience and variety as its strength.

That convenience factor strikes at the heart of Carvana's business proposition. Carvana sets up "car vending machines" in key cities and offers buyers a still-novel way to shop from home for a used car without haggling and to have it delivered to them, sometimes on the same day.

But there are two words that many on Wall Street use when describing Carvana's business over other car-selling companies: competitive moat. From a struggling business in late 2022 and part of 2023 that was beset by a cash crisis followed by a bankruptcy-dodging deal with bondholders, the company has carved out a comfortable and lucrative space for itself.

"Carvana every month is deepening their moat," Zackfia said. Management "came back stronger and fearless, and they've been much more agile" since the crisis.

EBay Motors, anyone?

Amazon Autos for now is mostly a "lead generator" for car dealers - it attracts people shopping online to their shops - and, to a lesser degree, it's a transaction facilitator thanks to its order-processing capabilities, said Jeff Lick, an analyst with Stephens. His recent note detailing the Ford deal is titled "Headline is bigger than the reality."

Still, Lick and others concede that the mere mention of an Amazon partnership generally elicits reactions, both from the companies that benefit and the ones that appear to be in the way. After all, this is a company with multiple irons on the fire - and one that is largely responsible for consumers' embrace of online shopping.

"I don't think they are offering anything that is unique yet," but Amazon obviously has a massive audience, said Andrew Boone, an analyst with Citizens Financial Group. And it's also part of Amazon founder Jeff Bezos's ethos of trying and testing out business ideas. The company is "clearly trying to build something here," Boone said.

Others have tried but haven't made much of a dent, ending up working pretty much as lead generators as well. EBay Inc.'s $(EBAY)$ eBay Motors is still kicking, selling vehicles as well as auto parts. Costco Wholesale Corp. $(COST)$ has its own car-buying program, launched in 1989, that taps into a network of approved dealers to offer "low, no-hassle" prearranged prices on new and used vehicles for members, among other services, a Costco spokesperson said.

Some dealers told Lick, the Stephens analyst, that Costco so far is a better lead generator than Amazon Autos.

Dealers' political power

Perhaps it will come down to a generational divide and to the very nature of car buying - the second most expensive purchase most of us will make in life, albeit an infrequent one.

Most people likely are hesitant to buy a car 100% online, "but more are willing to do it every day," said Karl Brauer, an analyst with iSeeCars.

Some car shoppers hate negotiating prices and want the process to be as quick and painless as possible, he said. For the most part, they are not looking to get the best deal, and they may not even be particular about which car they ultimately buy.

Those are the people most likely to buy a car online, and they may be more likely to be younger than say, 35, Brauer said.

"There will still be people like me who will want to do research," Brauer said. "Nothing else, except homes, costs as much as modern cars do."

And any future car-buying disruptor, be it Amazon or someone else, will have to deal with an existing infrastructure and legal framework that still very much ends with car dealerships, a system that only one U.S. carmaker, Tesla Inc. $(TSLA)$, has successfully challenged.

(Tesla sells its electric vehicles exclusively at its own stores and has spent years embroiled in legal and political wranglings in several states to be able to do that.)

"The dealer industry is all over [car buying] and kind of owns it," Brauer said. "There wasn't a bunch of political power protecting shoes from online buying."

-Claudia Assis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

November 24, 2025 07:00 ET (12:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.