Carvana keeps betting on Stellantis by adding its 6th new-car dealership

Carvana Co. on March 3 went a step further into the franchise automotive sector, buying its sixth new-car dealership in a move that deepens its relationship with Stellantis.

The online used-car retailer purchased Colonial Dodge-Chrysler-Jeep-Ram in Hudson, Mass., from Colonial Automotive Group owned by Lawrence Gordon. The store, renamed Carvana Chrysler-Dodge-Jeep-Ram, is west of Boston.

“We look forward to bringing exceptional Carvana experiences to Boston-area Chrysler, Dodge, Jeep and Ram customers,” a Carvana spokesperson said in an email to Automotive News.

The purchase is its sixth since February 2025. It also has CDJR stores in Sacramento, Calif.; San Diego; Casa Grande, Ariz.; Union City, Ga.; and Dallas. The stores are branded with the Carvana name. Carvana paid $160 million for the five stores, according to a regulatory filing.

Carvana did not comment on why it decided to purchase the Boston-area store or its overall franchise acquisition strategy. But the retailer may be buying up Stellantis stores because of the wide variety of product offerings, proximity to more customers for vehicle delivery, access to used vehicles and parts, and learnings from the service and parts business, analysts told Automotive News. And some CDJR stores have new-vehicle sales upside, some buy-sell brokers say.

Stellantis issues new dealership acquisition rule

The Massachusetts transaction comes nearly two months after Stellantis issued an updated policy, effective Jan. 6, saying “no person or entity may acquire more than one CDJR dealership within a rolling 12-month period,” according to a copy of a memo sent to dealers obtained by Automotive News.

It wasn’t immediately clear how Carvana was able to purchase the Massachusetts store given the new rule. Buy-sell deals, however, can be in the works and under contract for months before closing.

A Stellantis spokesperson March 2 said the carmaker placed the limit on the brand’s store ownership to maintain a competitive environment.

“Recently, Stellantis has seen an increase in interest from new and untested dealers to our network to purchase a number of locations,” Stellantis said in an email to Automotive News. “We want to ensure healthy competition for our customers and that our dealer network remains strong and vibrant.”

Stellantis said the policy change was not because Carvana bought five CDJR dealerships within the last year.

“The rule was put in place so we can continue to focus on building a healthy, competitive dealer network that provides exceptional service for our customers with the brands they love,” the Stellantis spokesperson said.

But some analysts think Carvana’s quick purchase of several CDJR stores could have been a factor in the Stellantis policy.

“I don’t think it’s coincidence that Stellantis is putting the brakes on consolidation amongst a single entity amongst its dealerships,” John Healy, an analyst for Northcoast Research, said. “I would think that given Carvana’s nature of being a disruptive company, and pushing the envelope of service and how the customer meets them would probably have maybe have pushed the boundaries of what some dealers like and don’t like in terms of maybe territories.”

Analysts expect to see Carvana continue to buy franchised dealerships

Continued growth in the franchise automotive space, though an infinitesimally small portion of the publicly held retailer’s holdings, is a sharp turn from its focus on digital sales of used cars from vending machines nationwide.

Carvana of Tempe, Ariz., is pursuing a target of selling 3 million retail used vehicles annually by 2030 to 2035, which would represent just 7.5 percent of the used-car market.

Carvana has 39 car vending machines nationwide, but none is in Massachusetts, according to the company website. The company does have a wholesale auction and reconditioning ADESA site in Framingham, Mass., about 20 miles west of Boston and 20 miles from the newly acquired dealership in Hudson.

Carvana analysts agree the retailer is secretive about its plans regarding new-car dealerships, but they foresee it making more new-car dealership purchases.

Carvana CEO Ernie Garcia was asked March 2 at the Morgan Stanley Technology, Media & Telecom Conference if there were specific plans to grow the company’s new-car business, reconditioning or servicing areas. He provided no specifics.

“I think the opportunities around us feel really, really, really big,” Garcia said. “And I think part of ... where we try to apply some discipline is just thinking through what is the most efficient thing for us to work on."

Jeff Lick, analyst for Stephens, said CDJR stores likely are attractive to Carvana since they provide four brands, bringing in a diversified used-car supply including lease returns.

But Lick said he doesn’t see Carvana owning many new-car dealerships. He thinks the retailer wants to learn about the franchise side of the business, with a possible special interest in service.

Marvin Fong, director for New York investment firm BTIG, said new-car dealerships put Carvana closer to consumers than ADESA sites, and that could increase the amount of inventory available for same-day customer delivery.

“If you think about what their goals might be, they’re not all tied to a nameplate,” Fong said. “Obtaining more flow of vehicles through trade-in, potentially providing a point of service for its customers, those are under any nameplate they might own ... . Buying one dealership a year isn’t going to cut it in terms of their endgame.”

What dealerships aside from CDJR might Carvana acquire?

Northcoast Research’s Healy said he thinks Carvana already has looked into other brands.

Healy said the level of ease in working with a particular manufacturer to establish some level of mass might be just as important as the brand itself.

“I don’t think Carvana probably is that excited about having one rooftop for a brand, but I think if they felt like they could get four or five, like they have had with Stellantis, I imagine that brand would move up to the pecking order,” Healy said.

He said Carvana also likely would analyze how a manufacturer would control its ability to source parts, how many parts they could source, how active they can be with certified pre-owned-type offerings, and geographic boundaries on new-vehicle home deliveries from the dealership.

Erin Kerrigan, managing director at Incline Village, Nev., sell-side firm Kerrigan Advisors, said while she hasn’t spoken with Carvana about its plans, she could see it buying a Nissan store.

“Carvana most likely chose Stellantis as their first franchise because it was the easiest for them to get approved by and achieve what they were seeking, which is access to used vehicle trades from the new-vehicle retail market,” Kerrigan said. “They are likely less interested in the franchise and probably more interested in this access point to more used cars through the new-car business model. With the Carvana virtual sales model and their substantial balance sheet, they have the opportunity to experiment in the new-car market while also gaining access to more used-car inventory for their primary model.”