AutoNation's CEO Thinks 99% of Car Buyers Enjoy Shopping at Auto Dealerships - Really?

AutoNation's (AN) CEO Mike Jackson said Tuesday that 99% of car buyers prefer to shop at a car dealership, as opposed to buying cars digitally from upstart used car dealers such as Carvana. No, that isn't a typo. 

"Here's another learning," said Jackson on a conference call with analysts Tuesday, "99% of customers want to come to a physical place and want to be able to change their mind [about a car they'll purchase]." Jackson declined to give the source of the number on the call.

"If they're spending $20,000 and $30,000, they want affirmation and to be able to test-drive a car. They feel more in control and empowered in the dealership than if a car [they've just purchased winds up sight unseen] in their own driveway."

Jackson, who was responding to a question from an analyst, said AutoNation, the nation's largest car retailer, has a strong online presence that can compete with digital sellers.

However, digital car sellers are taking off. By next year, digital bought used car sales will hit 3 million, on their way to reaching 3.7 million units by 2022, according to a report from Frost & Sullivan.

Through Carvana, you can handle everything online, from the selection process to financing. Carvana owns parking garages, called vending machines by the company, in Atlanta, Nashville, Houston, Austin and San Antonio. If you live outside those areas, Carvana will reimburse you $200 for a one-way airfare, so you may travel to one of its locations, or you can opt to have the car delivered to you for a fee.

Losses have accelerated for Carvana each year since 2014. Total losses have amounted to $145.1 million over the past three years.

Another digital used car seller is Shift, located now only in California, works in a way similar to Carvana, but delivers the car to the prospective buyer for a 45-minute test drive.

Carvana could not immediately be reached for comment.

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