Hi everyone. Thanks for, thanks for joining. My name is David Lance, and I'm a part of the Retail Hardlines team here at Wells Fargo. We're very pleased to be joined by the co-founder and CEO of Carvana, Ernie Garcia, as well as Mike McKeever and Austin Knutson from the Capital Markets and Investor Relations team. Thank you guys for joining.
Thanks for having us.
You know, with that, we'll jump right into Q&A. Units have grown significantly for the better part of two years. What have you and the team done to get the business back into growth mode?
Yeah, so I would say our version of the story would be that I think, you know, we launched as a company in 2013, sold our first car in January 2013. I think we were in growth mode from then until early 2022. I think we massively made a huge strategy shift where we needed to no longer be reliant on capital markets to run the business. That led to us doing all sorts of things that caused us to pull back quite a bit on growth and actually go the other way for a year and a half, two years.
I think we just kind of stopped doing the things that were designed to rapidly improve unit economics and led to the business shrinking a bit and moved back to the same equilibrium that I think we had, you know, for the many years prior to 2022. We are now growing again. I think the fundamental driver is just that we deliver an experience that is desirable to customers that is not completely understood. I think we have to keep delivering great experiences over time. I think as we do that, more customers tell their friends, and that drives more growth. The business itself has positive feedback through inventory growth and everything else. I think we just are leaning back into those levers.
Got it. That's helpful. You're aiming to sell 3 million retail vehicles in a year in 5 years- 10 years from now. Can you talk about the factors that could help you reach this in the earlier part of that or the later part?
Sure. For perspective, for those of you that aren't that close to Carvana, you know, over the last couple quarters, we've been run rating around 600,000 units per year, give or take. I think getting to 3 million is around a 5Xing of the business. You know, we've moved through several orders of magnitude since launching at zero in 2013. We're doing it into a market that has 40 million transactions per year. That goal of 3 million units, while very large in absolute terms, is only 7.5% of the market that we're in. We think it's extremely achievable in terms of just the size of the market that we're moving into. Our business is, relative to most growth businesses, I think it's very operationally intensive.
We buy cars mostly from customers, but also from auction. We put about $1,000 of parts and labor into every car that we buy. We photograph the car. It goes up on a website. A customer goes through a process to get approved for financing. We do verifications. They select their delivery time. We deliver it to them. We do title and registration. There are many components of the business that are complex. Our view is just continuing to scale that system at the rate that we're, you know, continuing to benefit from constantly growing demand for our offering is the hardest thing to do. To hit that goal of 3 million units in 5 years equates to approximately 40% compounded growth. To do it in 10 equates to approximately 20% compounded growth. You know, we think that 40% is achievable, but obviously hard.
I think, with relatively limited, if any, precedent for, you know, other businesses in history that have been disruptive concepts. I think that suggests that it's hard. We have got a plan, and we're marching as quickly as we can. We will see where we end up in that time frame.
How do you think about the balance of appropriately ramping production lines while also taking advantage of incremental near-term share gain opportunities? I know, you know, in Q3 you had mentioned that the, you know, the market is flattish, and some peers have had some mixed reads since then. I was just curious, you know, how you think about balancing the appropriate long-term stance with, with, you know, share gains today.
I think our, given our belief that ops is the likely driver of our timeline to achieving any given level of scale, I think, you know, over time we've been approximately, you know, operationally constrained is kind of, you know, how quickly we've, or what has driven our growth over time. I think we generally want to try to make decisions that smooth out ops as best we can, and make it easier for us to grow at high rates for sustained periods.
I think trying to continually, you know, open additional, what we call lines, we have production lines inside of our facilities and then open additional facilities, which means that we have more places to open lines in the future, means that, like, when you reduce the actual hardest operational problem in our business, it is likely scaling inspection centers. The work that happens to scale the business happens at the individual center level. By having access to more of these centers, which is more work today than just scaling in centers that we already have that have excess capacity, but by opening more of those centers, we basically make it so in the future we have an easier scaling problem because we have more locations to do that work.
I think right now we're focused on trying to, to lay out a multi-year plan to grow at high rates, for a long time. That means continually growing inspection centers. We've been continually doing that.
Got it. Recognizing that it's a really fragmented category, where would you say that your share gains are primarily coming from today?
I think our view is that our share gains are very broad-based. I think an interesting result of the automotive retail market being so fragmented is that publicly reporting companies are probably on the order of 10% of the market. In most retail verticals, the largest player is, you know, 20%-30%, and the next largest player is, you know, 15%-20%. If you have four or five public companies, you probably have the majority of that vertical that is reporting. I think investors get a lot of visibility to that. I think in our market, because it is so fragmented, a relatively small portion of the market is public.
I think oftentimes the narrative that is dominant in our industry can be dominated by, you know, what a couple companies are seeing or experiencing. I think as a general matter, given how fragmented it is, you know, if we were taking share randomly from all other retailers and, you know, we're currently 1.5%, give or take, of the market, we'd be taking about 1.5% from everyone. That would obviously be, you know, very small, and would not be noticeable to others. I think there probably is more concentration than like a true random draw, across all these different retailers.
When we try to look at all the data that we have, where we can look at, you know, all the cars that are listed online and where customers are buying from, and we can look at cars that we value that then customers sell to a different dealer, and we can see where those show up online and what dealer ended up buying those cars. We try to say, who are we competing with? It tends to look like a mosaic of the entire industry more so than any concentrated number of players. I think our general view is that we just got to stay focused on our customers, keep delivering great experiences. We know one player in this industry probably has a massive indirect impact on any other player in this industry, and we think that likely goes both directions.
When we think about the go-forward growth potential and the, you know, the 20%-40% CAGR that you mentioned over the next 5 years-10 years, how important is the used car auto backdrop in achieving that?
I think as a general matter, used car retail has averaged for 20 years about 40 million units, and it's probably been as high as 43, and it's probably been as low as 35, 34 maybe. I think, you know, the trough 34 was, was like 2009 or 2010, post the great financial crisis. I think generally speaking, like, you know, in our most recent quarters, we've been growing at about 40%. That's a very high rate of growth compared to the variation that we've seen over 20 years in the entire auto industry. I think our view is if the auto industry moves up or down by 2% or 3%, probably the best first guess is that we'll move up or down by the same amount.
That ends up just not being a huge part of our story in light of our growth, and so we're much more focused on laying foundations for sustained growth over a long period of time. And then I think we'll benefit when the market grows a little bit, and, you know, it'll hurt us a little bit when the market shrinks. On average, it's about 40 million units.
I was in Orlando last week at the IRC tour, and there was some commentary around from the team that you're comfortable with the rate you're growing at the 44%. Can you, you know, dive into that a little bit more too, especially as you get kind of tougher comparers here over the coming quarters and into 2026?
Yeah. I mean, I think, again, I think growth happens at a location level. Like, there's many different kinds of growth, but, like, some growth that is pure technology, like functions that are pure technology, things like credit scoring for us, they scale incredibly well, right? Like, you just turn on more servers, do more calcs, the scale just kind of shows up, and it's very easy. The other side of that spectrum is reconditioning centers. And in between that, you have customer care and, you know, registration and verifications, and you've got logistics. I think when we look at all those different groups, we say, okay, let's look at the groups that have the worst scaling properties because you have the most labor and movement of physical things per unit of growth.
Let's look at what we've achieved in the past. When we look at, you know, how we grew in 2020 and 2021, and we look back at, you know, we averaged, you know, 10-12 inspection centers back then, compared to where we are today, we're like, okay, we likely, by adding the same capacity per center that we did in 2020 and 2021, we can likely hit, you know, the last year at 40% growth, going from, you know, a little over 2 million- 3 million, right? If you compound out of that 40% the entire time. We think that it's a problem of complexity, of a complexity that we have seen before and kind of executed against. It's hard to sustain that over and over.
I think, you know, when the team says that we're comfortable at our current level of growth, you are at an inspection center talking to the team on the ground that is adding lines on the ground. That's where work actually happens. So far, I think the team, you know, on the ground in these locations and the corporate team that's overseeing a lot of this and the people ops team that's helping us hire in all these different locations, they've done a really good job. I think our growth has felt comfortable. I think there's reason to believe that we should be able to continue to grow at high rates. Of course, it's going to be hard. I think, you know, we'll work really hard to make that as smooth as we can.
Got it. And, you know, since we're at the TMT Summit, I'd obviously be remiss to not ask you about AI. So how is the company using it today, and how is it benefiting both internal processes as well as the customer?
I find AI to be such a hard question to answer because it's just, it's everywhere. I know how skeptically I look at other people when they start saying AI is everywhere, and they know it means higher multiples. I can only imagine everyone looking at us with the same skepticism. I think it's in every part of the business at this point. I think what's really beneficial about Carvana is we built our business in a way that led to everything being kind of designed in systems that are API accessible and all decisions being deterministic and all of those things being able to be calculated very, very quickly and all of the data being stored in places that we immediately have access to because it's all first-party. We're vertically integrated throughout.
By virtue of just building the business that we've built over the last, you know, 12 or 13 years, we laid foundations incredibly well for an AI world where you can then take all of those services, and you can take all that structured data. As long as it exists in a good place and it's immediately accessible, you can push it to these brains that can provide very high-quality answers very quickly. That shows up in, in obvious areas like our chatbot. It shows up in, you know, different tools we're building on the, the site today. It shows up in productivity throughout the entire organization. It's, it's amazing what many of our different groups are doing.
I mean, our modeling groups have built basically like collections of agents at different levels where you've got an agent that takes in a data set and goes through and cleans it. And you've got another agent that converts that into variables that likely have intuitive meaning. And then you have an agent that goes through and generates models. And then you have an agent that goes through and skeptically evaluates, you know, the result of those models to try to figure out where there might be holes. And they're just now able to generate models at literally 100x the speed that they could even a couple of years ago.
In like our development teams, development is like one of these areas where I think if you ask five developers the best way to measure developer productivity, you're going to get 13 answers. I think trying to figure out what's the best metric to evaluate the speed at which we're increasing our output through our engineering teams isn't trivial. I think we're materially up over the last six months by any of the metrics. It seems like that's just continuing to happen. I think productivity, customer-facing capabilities, is showing up everywhere.
Got it. And then, you know, shifting gears here to GPU. So you regularly talk about opportunities remaining across every line item within GPU. So can you talk about that in a bit more detail across retail, wholesale, and other?
Sure. There's a lot, there's a lot in there. I mean, I think let's maybe zoom into retail a bit because we can maybe talk about it a little, a little bit more deeply. I think in retail there's a couple things that are interesting that are going on. I think that there's some like foundation laying that, you know, we think will lead to fundamental gains that, all else constant, will be a tailwind to retail GPU, which are things like rolling out ADESAClear and having, you know, rolling out mega sites and having both retail and wholesale capabilities at all these sites so that we can be a more efficient buyer of cars.
Basically, just between us and natural sellers of, you know, large pools of cars, we can cut costs out of the system and split the gains between us and them. That is kind of like a structural improvement to the business that saves time and cost and energy, and therefore leads to, you know, gains. I think that we are constantly improving. All of the ways that we buy cars and we price cars and we merchandise cars are informed by, you know, the quality of information we have about every car and the density of the information that allows us to understand how much any given feature is worth to a selling customer, to a buying customer, and where we are supposed to merchandise that.
That data, the sum of all that data that we have is growing at approximately the rate that the retail business grows. For any given model, you run into noise at a certain depth. If you're growing at 40% every year, you can move down like a level of depth roughly every year in terms of what you truly understand that you're able to price intelligently without being overwhelmed by noise. Just getting smarter with getting more data and then being able to utilize all that data to price on both sides of the market and merchandise in the middle and build search tools in the middle as well also helps retail GPU.
Those are maybe like one's a structural advantage and one's kind of like a, a more of an analytical and, and data, type projects. Both those we expect to lead to increases in retail GPU, all else constant. I say all else constant because we also, you know, definitely plan to pass back fundamental gains to customers, as we think we're now at a spot where it's very easy to have line of sight to 13.5% EBITDA margins, which is a target that we've set for ourselves for reasons we can explain if, if interested. We think that there's enough fundamental gains to push us beyond that.
We think it is going to be smart for us to utilize those incremental gains to pass back to customers, to further differentiate our offering, to enable us to play a really outsized role in this industry over a long period of time. I, I maybe those are some examples.
Got it. You know, how do you, how do you think about the importance of passing fundamental GPU gains back to consumers as a function of achieving the 3 million retail unit target over the next 5 years- 10 years?
What I would say there is I think a good approximation is that the quality of customer offering that we're giving to customers today versus the offering that we gave 10 or 12 years ago is about the same. We've driven, you know, for all but a year and a half of that period, we've driven very outsized growth at constantly increasing scales from a base of 0 to a base of 150,000 a quarter with an economic offering that has been approximately constant. I think there is, at that level, you can look at our older cohorts, and you can see that we have higher market shares in those markets. You can look at our younger cohorts and see that they're ramping at a similar faster pace than the older cohorts were.
You can extrapolate out to much larger scale than we are today. You can look at those oldest cohorts and you can say they're still growing at very fast rates that approximate the rate at which the company's growing. You do not know exactly where that goes, but it suggests there's a lot of headroom there. I think we can look at, you know, passing economic benefit back to customers. We A/B test all that through rates and through customer bids on buying cars from customers and through pricing. We have an understanding of what those elasticities are. To me, those are all just tools in our arsenal.
I think in the best version of the story, and I think something that's consistent with historical data, it's not obvious that you need to be passing back a ton of those economic gains to drive continued high levels of growth. I think that we've got lots of visibility to continued high levels of growth with our offering exactly where it is today. I think that that's just kind of additional fuel, that we think is going to be smart to use over time.
Got it. And, you know, on the EBITDA margin front, so you're in low double-digit territory today. Can you help us think through why 13.5% is the right target over the next 5 years- 10 years? And I know you mentioned, you know, there's potential upside from that, but, but just as kind of a starting point.
Sure. We could talk about that one for a long time too. What I would say is, I think right now, like one way to articulate 13.5% is where we've been for the last couple of quarters, plus if you just look at our overhead expenses and you assume that we lever that even partially with respect to growth on our way to these higher targets, it's very likely we would move through 13.5%. We are separately talking about all these fundamental gain opportunities that we think we have in every revenue line item and every expense line item that are going to be hard to unlock but that we plan to unlock over time. That suggests, okay, why don't you just go well beyond that?
If you believe that, you know, with a fixed economic offering quality to customers, we have driven all the growth that we have seen since inception to today. I think that is a reasonable argument. I think the other argument is that there is elasticity. Even in our 3 million goal, we would be at 7.5% market share. I think, you know, while it is important to have a goal at any point in time, it is not hard to imagine that when we get to that spot, we will look further down the field and have bigger goals. It is likely smart for us to pass some of those gains back because we can evaluate what is elasticity and what is the value of incremental sale relative to the cost of getting that sale by handing economics back to customers.
That math suggests that we should be handing some back to customers and that, you know, we could take a really meaningful share. I think as we do that, we are also competing with, you know, we are about 1.5% market share. For the most part, the other 98.5% market share of the market shares a cost structure, and shares a revenue model that is very similar. If we put pressure on that business, the sum of those businesses are not super well positioned to respond super easily because they just have a differently structured business. It is probably smart for us to do it for that reason as well. I think, you know, 13.5% is not a perfect scientific exercise.
It's like a bunch of science goes into it to approximate, and then you try to pick a reasonable goal, and that's the goal we picked.
Got it. And on ADESA, you're completing about 10 integrations a year. So curious how you're measuring success there.
I mean, I think the success is measured by opening the sites, doing the technology conversion so that we have the ability to run our play, getting leadership in place at those sites, and then beginning to scale them and produce cars and then have those cars, we compare those cars when we do, you know, through what we call a global local process where we look at any given facility that's doing any given function, and we compare how that facility's performing compared to the other facilities that perform the same function. In, you know, recon, we want to look at cost, speed, and quality and just say, how well is this location doing in those three dimensions relative to our other locations? How quickly can we, you know, climb that curve to be as efficient as other locations?
I think the steepness of those curves is a major way that we measure it.
As inventory pools ramp, can you walk through some of the benefits and risks associated with that?
I think let's start with the risks. The risks are, it's inherently harder to open a new location and ramp up from zero because you have the new technology rollout, you have new leadership, you have all new people that you have to hire and train that do not get to learn from pre-existing people that are already there doing the exact same thing. It is just kind of inherently a harder problem. I think that when you're taking on any operational problem, the harder it is, the higher the likelihood is that you stumble. I think that's the risk. I think the benefit is very mechanical.
It's just, you know, in the most efficient version of the Carvana machine, you want to have many locations around the country that are distributed approximately similarly to the way the population is distributed so you can buy cars and minimize the transport to the location where you're going to do the reconditioning and then merchandise it and then have ideally as much density at each one of those locations so that customer, you know, as much density as you can with the best distribution of inventory so that customers nearby are most likely to select cars that are nearby. You also have less outbound transport.
The more locations that we add, necessarily the shorter the distances for the average inbound transport, and then either the shorter the expected distances for the average outbound transport or the more selection you have that's available faster depending on how you want to position the system from like a shipping fee perspective.
Got it. That's helpful. There are a lot of concerns out there today around the credit environment. Curious if you could talk about how you see the backdrop today.
I think you always look smarter to be cynical and skeptical. We have a really strong desire, especially on this beautiful stage, to look smart. I want to be cynical and skeptical. I also think the data that we look at looks pretty good. I think it has been interesting to try to do some work on our side to tie out, you know, why do a bunch of smart investors feel like they're really anxious about credit? Why do most originators and investors in credit feel like things are kind of, you know, moving forward about as expected?
I do not want to say that we have all the answers there, but I do think there is a good chance that a decent part of that puzzle is that every originator, I think, had tough 2022 and 2023 vintages and then virtually every originator tightened credit in late 2023 or early 2024. I think if you are looking at portfolio level metrics, the 2022 and 2023 vintages are playing a bigger and bigger role in the overall portfolio, and causing things to keep looking like they are getting worse. If you are looking at actual vintages, I think it was easy to forecast where those were going to be, you know, 12 months ago. Most of the 2024 and 2025 vintages look pretty good.
It seems like consumer credit is better than the average narrative out there, but maybe we end up being wrong on that over time.
There is a big opportunity with brand awareness, obviously, with where your market share sits today. Can you talk about how you're going about capturing that and how you're using advertising as a lever?
Sure. I mean, to me, I will just say that, like, I think one of the interesting things for any, like, analytical mind to look at is to look at the cohort curves that we gave out, you know, every year, up until, I believe, 2021. You can kind of see that our oldest cohorts were ramping at a certain speed, and then the newer cohorts were all ramping at a somewhat similar speed. There is this question, like, okay, if you launched a market and then a bunch of time passed and you got to a certain market share, how come when you launched that next market, why did it not just start at the same market share that the other market was already at?
You know, if you have inventory that can be shipped around the country and you have, you know, prices that are the same and you're bidding the same for customer cars and you've got financing that's the same, like, and you roughly are using mostly national advertising channels, why don't you start at that same point, and just kind of instantly jump there? What we actually saw was you start at the origin and you build up over time. To me, I think it's because in many customer conversations, it becomes clear that the actual question customers are asking themselves is they're saying, "Carvana seems appealing." Like, first of all, I don't know what Carvana is. It's, it's, I've seen some ads and it's that vending machine company and how does it work? That's how most customers think about Carvana.
They learn more and it's like, okay, not going to a dealership for four hours sounds appealing. A broad selection sounds appealing. A reasonable price sounds appealing. A seven-year return policy, that sounds appealing. The other thing is I'm anxious about buying a car, right? Like buying a car is an anxiety-producing customer experience that has a reputation that has been earned over a very long period of time. Part of what I'm trying to do is have it be better. Part of what I'm trying to do is make sure that I don't do anything dumb. A lot of times the way to feel the least dumb is to do the traditional thing.
I think many customers are like, that's the debate that they have in their head, is like, okay, Carvana seems appealing, but also if I just buy a car the old way that everyone's always bought a car, I can't be that wrong. I only buy a car once every five or six years, so what do I do? I think what brand advertising is about and what delivering good customer experience is about is like, if you have something that is actually fundamentally better, you just need that story to be in the minds of consumers to overpower the anxiety of, "I just want to make sure I don't look dumb." I think, you know, that most importantly, that's about delivering good customer experience over and over again and having friends tell friends about it.
It's also about leaning into advertising a little bit and making sure that our brand is out there because, you know, even things like, we all kind of know this. If you see an ad on Monday Night Football, you think that company's legit, right? You just do. Like, that happens subconsciously. You believe that and you don't necessarily believe it if it's, you know, or you'll believe it to a lesser degree if it's a low-budget ad, you know, during a local news broadcast, right? You're going to feel differently about those things.
Just getting out there in the world and having people see you and make all those subconscious connections so that they do not run the risk of feeling like they made a mistake is, I think, a huge part of what we have to do over a long period of time to go from 1.5% market share to 7.5% to beyond that.
Got it. And then on same-day and next-day delivery, how are you measuring success of the Pilot in Phoenix?
I think we feel like the benefits to faster delivery in conversion are very well understood. I think it's about how well we're executing, how many customers we can get to have options, where they have a same-day delivery option available to them. And then what is the customer uptake? And then how well do we actually fulfill that promise? That's, I think, generally how we're measuring it. I think, you know, the progress we've made there is very impressive. It's more, I think for a business to be able to grow really fast for a long period of time, you want it to be as simple as possible. For a business to have moats that are defendable, you want it to be as complex as possible.
We happen to be the latter kind of a business. It's complex. Same-day delivery is not like a make a strategic decision, you know, hire more people, you know, deal with a little bit less labor efficiency and you've got it. There's a lot to do because, like, you have to manage, you know, different complexity of finance verifications for different credit types. You have to manage car picking. You have to manage presale inspections. You have to manage title and registration that varies by location. You have a lot of things that you have to manage that require that we kind of reoptimize our systems and design for them. You have to make sure that you also have staffing so that you can fulfill that, you know, very quickly. It's like a real undertaking.
That's why we focused, you know, we rolled out the capability to many markets and sort of let like our system, as it was already kind of naturally designed without that specific intent. Our staffing models, as they were already designed without a specific intent, we let same-day delivery sort of happen in that way. What's happening in Phoenix now is we're purposefully trying to increase the availability of that option to many more customers through system design and through staffing models. I think we've seen a lot of success so far and we hope to continue.
To what degree is a broader rollout of same-day delivery embedded within your assumptions for 3 million retail units a year?
I mean, I would go back to, I think a lot of what we're doing when we're estimating future retail units is we're looking at market shares of our earlier cohorts that are higher. Then we're looking at the growth rates of those. We're looking at the various elasticities across the business. You know, we have estimates for when you grow inventory, what does that do to conversion? What does that do to scale? How does that kind of feedback loop play out when you, you know, we've made delivery times continually faster over that entire period of time? We have estimates of, you know, the feedback of that. We can kind of look at those things and extrapolate them out.
And they definitely play into our models and into our confidence that that kind of a number is achievable. But like we haven't, you know, broken that out precisely.
For those not familiar, can you talk about the differences between the full build-out of ADESA locations that will begin in 2026 relative to the integrations that are already ongoing?
Sure. The biggest difference is that auction locations forever, like, as a seller of a car, when you go to an auction, you have an option to say, you know, replace this windshield and, you know, clean up this headlight, you know, and bang out this dent over here. I'm going to spend $500 to do that. My hope is that I'm going to sell the car for $750 more. Most auction businesses have some, like reconditioning slash like mechanic capability that was already built into the auction business itself. There's building in space for that. A lot of the initial rollout that we were doing was utilizing existing space that was underutilized, maybe putting in some lifts, putting in our software, putting in management teams and leadership and hiring and training, and then pushing reconditioning through that pre-existing footprint.
The full build-out means now we go to a site that's, you know, 50 or 60 acres where maybe the initial build-out that already exists as part of the auction was enough to support one or two lines. We want to have building capacity to support 6-8 lines. We then need to maybe build another building, put down a photo booth, put in more lifts. That's more, you know, capital intensive. That's why I think we've been able to open so many of these locations with very low capital intensity to sort of get a toehold for these different inventory pools and leadership and everything else. I think we'll now go through and start to fully build out some of these facilities where we can do meaningful volume out of each one.
Got it. Can you walk through some of the differences and, to your point, the capital intensity of the fuller build-outs versus the integrations that are ongoing and kind of split that out?
Yeah. The integrations that we have done so far for the most part have been very low CapEx. And then, you know, when we bought ADESA, we sized the CapEx that would be required to do the sum of build-outs to get us to 3 million total reconditioning capacity to be around $1 billion. I think that remains a good ballpark estimate. There has been some inflation since then. I think it has probably ticked up a bit, but that is a good first-order estimate. You take that, you know, divided by the number of sites that we will do, and that is approximately the investment that we expect at each location.
Got it. It looks like we only have a minute left. I have one more here. Can you just talk about the timing and the significance of the recent upsizing and new loan sales that were announced in Q3?
Sure. I think, I mean, I'm extremely biased here, but I think as a general matter, consumer credit is a deeply fundamental and highly valuable asset for people to invest in. As a general matter, it's relatively hard for even pretty sophisticated investors to get access to many of these types of loans. I think the way the markets have evolved there over a long period of time is that, generally speaking, you have companies that have kind of paired capital with sales teams that go out to many dealerships with verifications capabilities and, you know, real-time credit scoring capabilities so that they can originate these loans. Then investors have had access to the equity in those companies. What our business does is we separate that. We basically have our own flow of customers that are coming to us.
We've got our own credit scoring. We've got our own credit pricing. We connect it to verifications and to servicing. Then we create, you know, an asset that is easier for investors to invest in without having to build all these operational capabilities. Basically, we think that in many ways, that's the exact same trade that is happening in all of FinTech. I think that in automotive, we're sort of doing that same thing and that opens you up to an entirely new investor class. I think we've got, you know, existing investors that we've had long-term relationships with that we're still selling lots of loans to and have upsized.
I think that we've been, you know, gradually getting deeper relationships with other new investors that are realizing even as they held loans, you know, they went through 2022 and 2023 that were not great vintages, that the downside cases look pretty decent. They are more excited to invest more money in those assets. Our hope is that as we continue to get more scale, we'll be able to do that more, and if anything, drive down our cost of funds and therefore drive up our finance GPU. We have to execute for that to happen.
This has been super helpful. Thank you, Ernie.
Thank you. Thanks, everyone.