Contrasting Strategies by CarParts.com and Carvana Highlight Auto Industry Shifts

In the auto parts and retail industry, companies face unique challenges and opportunities as they respond to changing consumer preferences and economic pressures.

Recent third-quarter financial results from CarParts.com and Carvana highlight their differing strategies and performances in a competitive environment. As each company works to meet market demands, their results provide valuable insights into the future of automotive retail and the approaches they are taking to drive growth and enhance customer experiences.

Carparts.com: Sales Down, App Use Up

Carparts.com reported its third-quarter financial results Tuesday (Oct. 29), showing net sales of $144.8 million, a 13% decline compared to the same quarter last year, along with a net loss of $10 million.

According to a press release, the sales decrease was driven by deliberate price increases to focus on higher value customers, support gross margin expansion, a continued challenging consumer environment in the industry and one-time impacts from the CrowdStrike issue and hurricanes Helene and Milton.

Despite these challenges, the company’s mobile app achieved over 550,000 cumulative downloads, more than double the figure at the start of the year. Additionally, the new semi-automated distribution center in Las Vegas is fully operational, managing 20% of the company’s volume.

CEO David Meniane pointed to ongoing improvements, stating, “Over the last 12 months, we have been working on re-platforming carparts.com to increase performance and shorten our development cycles. We expect to emerge from this transition period, positioned to capture the growing opportunity in front of us within a fragmented and underserved $400 billion auto parts market. Customers value our offering, and our business model is highly differentiated, scalable, and difficult to replicate.”

Meniane’s vision for strategic enhancements reflects the company’s commitment to growth and customer satisfaction, as he said, “we generate eCommerce traffic on CarParts.com in excess of 100 million visits per year. Over the next two quarters, we’re committed to delivering additional revenue-generating features such as AI-powered product recommendations, a loyalty program, as well as other marketing technology enhancements to make our marketing dollars work smarter.”

CarParts.com adjusted its full-year net revenue guidance downward by $5 million to a range of $595 million to $600 million.

Perspectives on Current Trends

In an interview with PYMNTS, Greg Zakowicz, senior eCommerce expert at Omnisend, said the increased cost of auto parts in the past several years has driven more consumers online in search of lower prices, often benefiting marketplaces like Amazon and eBay as consumers trade brand names for price.

“Interestingly, email marketing performance for auto parts retailers in 2024 remains healthy,” Zakowicz said. “For the first nine months of the year, we see the email marketing open and click rates for the vertical improve compared to the full year 2023, and the vertical remains among the better ones in these categories. This resilience is partly due to consumers willing to tackle more at-home repairs to curb the added costs of repair shops. This bodes well for the sector and its growth, but competing with low-priced marketplaces will remain a challenge for some time.”

Neil Saunders, managing director, retail, at research firm GlobalData, told PYMNTS that while selling auto parts online has become a bigger business, there are issues including helping customers understand the exact parts they need.

“There are a lot of nuances and variances in parts, which is why many consumers still prefer to use auto dealerships and specialists,” Saunders said. “There are also online generalists, like Amazon and eBay, who are first ports of call for less specialized parts — consumers like these players because they offer reliable delivery.”

Carvana: Revenue Up

Online car marketplace Carvana reported its third-quarter financial results Wednesday (Oct. 30). For the three-month period ended Sept. 30, 2024, Carvana sold 108,651 retail units, marking a 34% increase year-over-year, with total revenue reaching $3.655 billion, up 32% from the previous year.

“And these profitability records have to be viewed in a very important context: they were achieved while growing at 34% year-over-year by a company that currently has just 1% market share,” according to the company’s third-quarter shareholder’s letter. “The machine we have built is fundamentally differentiated and the result is an opportunity with few precedents.”

According to the shareholder’s letter, company officials have three fundamental growth drivers: continuously improving their customer offering, increasing awareness, understanding and trust of the brand, and increasing inventory selection and other benefits of scale.

“The pieces are all in place,” the letter adds. “We are a team that knows how to build. We have an offering customers love. We have a uniquely profitable and highly scalable business model. And we have already built, acquired, and invested in the most complex and expensive parts of the infrastructure necessary to be many multiples larger than we are today.”