On top of macroeconomic turbulence, Carvana Co. is navigating another burgeoning problem: state-level legal challenges to its operations.
As we at Automotive News have reported, Carvana in the last couple of years has grappled with regulatory scrutiny in multiple states. The latest dispute is shaping up in Michigan, where a court recently affirmed state regulators were within their right to suspend on Oct. 7 Carvana’s license to sell from its vending machine-like location in Novi, a Detroit suburb.
Michigan suspended Carvana’s license after regulators alleged that the company had violated the state’s vehicle code in numerous ways, including failing to apply for vehicle titles and registration within 15 days of delivery, failing to maintain and make available records and improperly issuing temporary registrations.
In July, a move by Illinois regulators to reinstate an earlier suspension of Carvana’s license — also borne out of alleged titling and registration timeliness issues — was temporarily blocked by a judge in Illinois’ DuPage County after Carvana filed for injunctive relief.
Even earlier in the year, Carvana averted a suspension of its license in Florida, while North Carolina’s 2021 suspension of its license expired. Vroom Inc., another online used-vehicle competitor, faced scrutiny over title delays in Florida and Texas.
We’ll get more insight into Carvana’s operating future in Michigan after Nov. 22, when it and Michigan regulators meet for a scheduled administrative hearing. Regulators may consider whether to revoke the retailer’s license in the state entirely. Illinois regulators and Carvana are scheduled to meet in December.
The company is also gearing up to release third-quarter financial results on Nov. 3. I suspect Carvana may report softening used-vehicle demand, especially after CarMax Inc., its formidable competitor in the used market, reported just that late last month.
That said, I’ll leave specific quarterly earnings predictions to the financial analysts who follow Carvana. Automotive News will bring you coverage of the company’s upcoming financial results in addition to providing ongoing coverage of state-level licensing challenges. Vroom and fellow online used-vehicle seller Shift Technologies Inc. are set to report their results the week after Carvana. Check back for those stories, too.