Carvana Co. (NYSE:CVNA) is accelerating the move away from dealerships, powered by a digital, vertically integrated model as credit worries fade and demand remains resilient.Needham's Mackenzie Holleran reaffirmed a Buy on Carvana with a $500 target.She said Carvana leads the shift from traditional auto retail through a digital-first, data-driven, capital-efficient, vertically integrated model.That approach, she says, delivers a cleaner, more compelling buying experience than incumbents and should create me ...

Core Insights - Amazon is expanding into the used car market by partnering with Hertz to sell its rental cars, which could significantly benefit Hertz and enhance Amazon's emerging automotive retail business [2][20] - The partnership poses a potential threat to traditional car dealers, as Hertz can sell directly to consumers at retail prices, bypassing auctions and reducing the supply of used cars available to dealers [10][15] Group 1: Amazon's Strategy and Market Position - Amazon has seen a remarkable revenue growth of 38,000% since its inception, and its entry into the automotive sector is seen as a natural extension of its retail capabilities [1] - The company is currently acting as a listing service for dealers rather than holding inventory, which allows it to leverage its e-commerce platform without the complexities of traditional car sales [6][22] - Amazon's digital advertising revenue reached $56.2 billion in 2024, indicating a strategic focus on high-margin businesses that can utilize consumer data for targeted advertising [6][7] Group 2: Hertz's Transformation and Market Dynamics - Hertz is undergoing a critical transformation after emerging from bankruptcy in 2021, with significant investments from activist investors like Bill Ackman [4][5] - The company has approximately 560,000 vehicles in its fleet, with a strategy to sell off cars after 18 to 20 months of rental, which aligns with Amazon's retail model [7][20] - Hertz's ability to sell directly to consumers allows it to avoid auction fees and achieve better pricing, which could disrupt traditional auction markets where dealers typically source used vehicles [15][16] Group 3: Impact on Traditional Dealers - The partnership between Amazon and Hertz could lead to a reduction in the number of used cars available to dealers, as rental companies may increasingly sell directly to consumers [10][17] - Dealers currently acquire about 20% of their used vehicle stock from auctions, and a shift towards direct sales could constrain their supply [16][19] - The used car sales contribute significantly to dealership profits, and losing access to rental cars could impact their ability to retain customers for service and parts, which are crucial for profitability [28][29] Group 4: Industry Evolution and Legal Challenges - The automotive retail landscape is evolving rapidly, with companies like Amazon and Carvana gaining traction, which may have downstream implications for traditional dealers [32] - Franchise laws in the U.S. protect new car dealers from direct competition with manufacturers, but digital companies are challenging these norms, as seen with Tesla and other emerging brands [30][31] - The increasing competition from rental companies and digital platforms could reshape how used cars are sold, necessitating adaptation from traditional dealerships [25][26]

Core Insights - Hertz has announced a partnership with Amazon Autos to sell pre-owned vehicles online, aiming to enhance its retail operations and profitability [1][3] - The initiative allows customers to browse thousands of used Hertz vehicles on Amazon, complete purchases online, and pick up vehicles at Hertz locations [2][5] - This partnership marks a significant expansion for both Hertz's car sales business and Amazon's automotive offerings, which previously focused solely on new vehicles [3][4] Company Strategy - Hertz's strategy includes increasing its digital retail presence and making its used vehicle inventory more accessible, aligning with its broader goal to boost retail operations [5] - The company is focusing on fleet management, revenue optimization, and cost efficiency as part of its "Back-to-Basics Roadmap" turnaround plan initiated after its bankruptcy during the Covid-19 pandemic [6] Market Performance - Hertz reported its strongest-ever quarter for retail vehicle sales in Q1 of this year, indicating positive momentum in its sales operations [6] - The Rent2Buy program, allowing customers to rent a used car before purchasing, has also gained traction and is set to expand to over 100 cities [7]

Page 1 Bank of America 2022 Auto Summit Investor Presentation April 13, 2022 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which are statements related to future, not past, events and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. In this context, the forward-looking statements often include statements regarding our strategic ...