Augmented reality may now put you in the driver's seat of your next car without ever leaving your home, thanks to Carvana's recent acquisition of Mark Cuban's company Car360 for an estimated $22 million. Car360 is one of the first applications of 3D computer vision, machine learning, and AR technology for the automotive industry. Carvana is an online-only used car dealer that allows customers to shop, finance, and trade in cars through their website.

Online car buying is nothing new. According to Automotive News, it will account for about 10 percent of car purchases by 2019, which seems low, considering 75 percent of people surveyed by Accenture in 2015 said they dislike the car dealer experience and would be open to an alternative.

Even eBay has gotten into the virtual dealership business, along with a few other companies. The speed of adoption of virtual car buying may accelerate due to technologies like Car360, which enable shoppers to "see" more of the vehicle they are considering buying. The website says they are "changing the way companies capture and tell a car's story." In other words, you as a buyer can see and experience every aspect of the interior and exterior of a car.

Arizona-based Carvana, which was founded in 2013 and sold 44,000 cars in 2017, has been on the fast track to expansion. The used car market is highly fragmented  so Carvana set out to become the largest "screen-to-home" dealer. The average auto on Carvana sells for about $18,000. What happens if the car you bought online turns out to be a pricey lemon? Carvana has a 7-day return policy. 

Ernie Garcia, 35-year founder and CEO of Carvana, started out in the car industry as an intern at Ugly Duckling, a national used car business. As his career progressed he continuously asked "Why?" about legacy systems in the used car market, which comprised 50,000 dealerships nationwide. Reducing labor, real estate, and advertising costs were the primary drivers of Carvana's automated sales model.

Although Carvana has always had its own proprietary system for photographing cars, Garcia was immediately wowed by the capabilities of Car360, which was developed by a fleet of technology experts. Its specific capabilities will be announced over the next six to 12 months, but Garcia says he's confident that the 3D experience will enable a much richer viewing and shopping experience for the buyer. 

​Carvana has also piloted "car vending machines" as a fun alternative to traditional dealerships.

Traditional dealerships will need to figure out creative ways to add customer service fuel if they plan to compete against the online car dealer. Throwing in floor mats and an air freshener will not be enough to close the deal in the near future.

Published on: Apr 18, 2018