Carvana (NYSE:CVNA) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Carvana Co. reported a record third quarter with over 217,385 retail units sold, marking a 39% increase year-over-year, and revenue of $8.04 billion, a 42% increase.
The company achieved adjusted EBITDA of $800 million and net income of $480 million, both showing significant increases despite rising interest rates and gas prices.
Carvana emphasized its long-term goal of reaching 3 million units annually with a 13.5% adjusted EBITDA margin, while highlighting improvements in customer experience and operational efficiencies.
The company highlighted the strategic importance of AI and agentic commerce, positioning Carvana’s vertically integrated model as well-suited to leverage these technological advancements.
The company expects continued growth in retail units sold and adjusted EBITDA in the fourth quarter, aiming for the higher end of the $2.7 to $3.0 billion adjusted EBITDA range for 2026.
Full Transcript
OPERATOR
Good day and welcome to Carvana’s third quarter 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.
I would now like to turn the conference over to Austin Knudsen with Investor Relations. Please go ahead.
Austin Knudsen (Associate Director, Capital Markets & Investor Relations)
Thank you very much. Good afternoon, ladies and gentlemen, and thank you for joining us on Carvana’s third quarter 2026 earnings conference call. Please note that this call is being webcast and can be accessed, along with our Q3 shareholder letter and supplemental financial tables, on the Investor Relations section of the company’s corporate website at investors.carvana.com. Joining me on the call today are Ernie Garcia, Chief Executive Officer, and Mark Jenkins, Chief Financial Officer.
Before we start, I would like to remind you that this discussion contains forward-looking statements within the meaning of the relevant federal securities laws, including but not limited to Carvana’s market opportunities and future financial results that involve risks and uncertainties that may cause actual results to differ materially from those discussed here. A detailed discussion of these risk factors can be found in the Risk Factors section of Carvana’s most recently filed Forms 10-K and 10-Q. These forward-looking statements are based on current expectations as of today and Carvana assumes no obligation to update or revise them. Our commentary today also will include non-GAAP financial metrics. GAAP reconciliations can be found in the shareholder letter posted on our IR site. With that, I’d like to turn the call over to Ernie Garcia.
Ernie Garcia (Founder and CEO)
Thanks, Austin, and thanks everyone for joining the call. Also, shout out to Meg who’s at home with her second and should be on a walk but is almost certainly listening to this call. So Meg, go for a walk. It’s nice out. We got this. The third quarter was another exciting quarter for Carvana. Our focus remains on building the machine to deliver 3 million units per year and 13.5% adjusted EBITDA margin. And the steady drumbeat of results heading in that direction is evidence of both the team’s execution and the achievability of those goals.
First, let’s look at the progress we are making scaling the machine. This is our first quarter with over 200,000 sales. Our run rate is now 870,000, double what it was just two years ago. This was also our first quarter with $8 billion of revenue. Our run rate is now $32 billion, more than double what it was two years ago. Next, let’s look at the financial results our machine continues to post despite the pressures of growth and an imperfect backdrop of increasing interest rates and gas prices. Our adjusted EBITDA in the third quarter was 800 million, a run rate over $3 billion, almost double what it was two years ago. And our net income was $480 million, a run rate of almost $2 billion, more than double what it was two years ago. We are the fastest growing automotive retailer with eight consecutive quarters of approximately 40% growth in an industry that’s flat.
And we are the most profitable automotive retailer with margins that are approximately twice the industry average for the 10th quarter in a row. The experience we deliver our customers has always been the foundation for this success. And the team’s hard work as well as the positive feedback in the model continues to separate us further from the pack here as well. Over the last two years, our NPS has improved by nine points as we are delivering cars to our customers two days faster. We’ve lowered the interest rate our customers pay by over 100 basis points, and we’ve made the entire Carvana experience simpler and more intuitive.
The machine is getting better. Despite the market share gains from doubling in two years in a flat industry, and despite our scale of 870,000 unit run rate, we still have just over 2% of used market share and 1.5% share overall. We are still extremely early in the game. In the letter, we briefly touched on another benefit of our vertically integrated model. In building it to serve our core business, we have created a very capable scaled platform. Our early success with Stellantis new cars is a clear demonstration of the platform value of Carvana’s operations, technology, brand and infrastructure.
In addition, our model is structurally different in a way that not only met the moment of the last 14 years, but also meets the moment of today. A question that we constantly ask ourselves in every part of the business is this: If we were building this today from scratch, what would we build? With a rapid increase in the capabilities of AI and with the first early looks at the opportunities agentic commerce will provide, it’s a relevant question with an exciting answer.
If we were starting from scratch today, we would build Carvana. AI is most powerful when decisions are automated and deterministic, when technology is architected to rapidly surface those answers, when there’s a steady stream of differentiated data to feed it, and in the presence of vertical integration where experiences get simpler and frictions between layers disappear. Carvana has all of this. Agentic commerce is much earlier in its maturity, but it seems likely to accelerate digital adoption, to reward companies who have put their effort into building fundamentally better solutions, and to put pressure on supply chains to be as low cost and fast as possible. Carvana also has all of this. It’s an exciting time. If we keep building the machine, good things are going to keep happening. The march continues. Mark, thank you.
Mark Jenkins (Chief Financial Officer)
Ernie. And thank you all for joining us today. Unless otherwise noted, all comparisons will be on a year-over-year basis. Q3 was another strong quarter for Carvana. We set new company records for retail units sold, revenue, gross profit, GAAP operating income and adjusted EBITDA. These results were driven by our company-wide focus on driving profitable growth and efficient operational execution. Retail units sold totaled 217,385 in Q3, an increase of 39% and a new company record. Revenue was $8.04 billion, an increase of 42% and a new company record. Consistent with past quarters, our growth in the third quarter was driven by our three long-term drivers of growth: a continuously improving customer offering; increasing awareness, understanding and trust; and increasing inventory selection and other benefits of scale. The third quarter marked our 11th consecutive quarter of industry-leading retail unit growth and industry-leading adjusted EBITDA margin.
Non-GAAP retail GPU increased by $85, primarily driven by wider spread between retail and wholesale market prices, partially offset by higher non-vehicle costs. Non-GAAP wholesale GPU decreased by $196, primarily driven by our 39% retail units sold growth outpacing our wholesale gross profit growth. Non-GAAP other GPU decreased by $299, primarily driven by our decision to give back to customers in the form of lower interest rates relative to benchmark rates, as well as by rising benchmark rates in the third quarter, partially offset by higher average amount financed and hedging gains.
Non-GAAP SG&A expense per retail unit sold was approximately flat. Operations expense increased $109 per retail unit sold, primarily due to higher fuel and logistics. This increase was more than offset by a $159 per retail unit sold reduction in overhead expense driven by our 39% growth rate. Advertising expense increased by $45 per retail unit sold as we continue to invest in building awareness, understanding and trust in our customer offering. We continue to see opportunities for significant SG&A leverage over time as we scale, driven by both continued improvements in operational expenses as well as leverage in the fixed components of our cost structure.
Net income was 483 million, an increase of 220 million. Net income was negatively impacted by a one-time $53 million pre-tax expense related to the early redemption of senior secured notes. Net income margin was 6%, an increase from 4.7%. Adjusted EBITDA was a record 800 million, an increase of 163 million. Adjusted EBITDA margin was 10%, a decrease from 11.3%, primarily driven by selling a mix of higher-priced vehicles and giving back to customers in other GPU.
GAAP operating income was 714 million, or 89% of adjusted EBITDA, an increase of 162 million and a new company record. Before turning to the balance sheet, I want to spend a moment on what sits underneath these results: the machine we are building to deliver on our long-term goals. With the scale of our ambition, building the machine is a continuous exercise, and our execution is the pacesetter for our growth. That machine has three components: Selection, Speed and Experience. Each of these maps to one or more major operational groups. Our inspection and reconditioning centers drive selection; our logistics and delivery network drives speed; and these, plus our customer care centers, drive customer experience. Within those groups, the work is carried out by our people, including technicians and cosmetic associates, vehicle transporters, last-mile delivery and customer care advocates, and many more. As we grow at 39%, our ability to hire and train these teams and to give them better tools and processes directly determines how we scale. We are actively working on each of these areas, and we are encouraged by the progress we are making.
Turning to the balance sheet, we continue to drive toward investment-grade quality credit ratios. Early in the third quarter, we further strengthened our balance sheet by refinancing the remaining 1.7 billion of senior secured notes due 2030 with a senior secured Term Loan B, resulting in approximately 45 million of annual interest expense savings. This transaction, along with the successful execution of our operational plan in Q3, resulted in a net debt to trailing twelve month adjusted EBITDA ratio of 0.8x and a trailing twelve month adjusted EBITDA to interest expense ratio of 6.9x, both new company records and again placing us in our strongest financial position ever.
Our results through Q3 position us well for a strong finish to 2026. Looking forward, we expect the following, as long as the environment remains stable: a sequential increase in retail units sold and adjusted EBITDA, and the higher end of our previously communicated range of 2.7 to 3.0 billion for the full year 2026. In closing, we are excited by what our team accomplished in Q3. We remain focused on executing at a high level, delivering profitable growth and making consistent progress toward our goals of becoming the largest and most profitable auto retailer and buying and selling millions of cars.
Thanks for your attention. We’ll now take questions.
OPERATOR
We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. The first question comes from Marvin Fong with BTIG. Please go ahead.
Marvin Fong (Analyst at BTIG)
Great, thanks for taking my questions and congratulations on managing all this growth. A question on other GPU and the interest rate environment. A lot of conversations among investors heading into this. Just how are you managing that kind of, you know, into the fourth quarter? Are you continuing to talk about 100 basis points of improvement to consumers? Are you passing along the full increase in the benchmarks or how should we kind of think about how you’re approaching that?
Mark Jenkins (Chief Financial Officer)
Sure, yeah, I could take that one. So, you know, I think I would break the, you know, that question into a couple of different concepts. The one is the idea of, you know, giving back to customers. And there I think, you know, an important moment was, you know, in late 2025, you know, we elected to pass back some of the fundamental gains that we had driven in Other GPU over the preceding time periods to customers in the form of lower customer interest rates relative to benchmark rates.
And so, you know, that’s a component of the question and a place where we’ve long talked about, hey, as we drive fundamental gains over time, we’d love to pass back some of those fundamental gains to customers to improve our customer offering, increase our competitive differentiation, and continue to just build the best offering for customers as we strive toward our long-term goals. So that’s this idea of passing back, you know, gains to customers in the form of lower interest rates.
Now, the second part of your question relates to, you know, the interest rate environment over the last couple of quarters. And, you know, it has been now, over the last couple quarters, really, actually this full year, a rising rate environment. And so when we’re in a rising rate environment, generally speaking, our mindset is to pass back, you know, pass gains, you know, movements in a rising rate environment. That means increases in the benchmark rate to customers.
Now, you know, we won’t always do that in full necessarily, and there can often be delays or lag times between when benchmark rates rise and when we pass back gains to customers. But as we’ve seen these rising rates in the past couple of quarters, we have been passing back some of those benchmark rate moves to customers. And I think, you know, we. That was definitely delayed in the second quarter. We saw that in our Other GPU results in Q3. Benchmark rates continue to rise meaningfully over the course of the quarter.
But we didn’t see a meaningful change in Other GPU quarter over quarter in part because, you know, we had sort of started the motion on, you know, passing some of those benchmark rates through. So that’s a, you know, pretty fulsome description of the dynamics. You know, I think of those two things separately. One is, you know, what was sort of the strategic pass back to fundamental gains last year and then how are we responding to these recent rate moves?
Marvin Fong (Analyst at BTIG)
That was great. Thanks, Mark. And a follow-up, if I may, just on retail GPU, pretty flat quarter over quarter. That was actually very good performance relative to some of the other publics. You still talking about some inefficiencies in the business, the ones that emerged sort of in the fourth quarter of last year. Where are we in catching up to that and just kind of comment in general how you kind of feel about retail GPU?
Mark Jenkins (Chief Financial Officer)
Sure, yeah. No, so I think, you know, it was a strong quarter for retail GPU. I think if we look on a year-over-year basis, I think we break it down as we see retail-to-wholesale spreads up year over year, partially offset by higher non-vehicle costs. Some of those higher non-vehicle costs were driven by inbound fuel costs. So that was a place where rising fuel prices impacted the business in the quarter. But overall I think we’re pleased with certainly the gains that we’ve made in reconditioning efficiency since Q4, early Q1 area where we were talking more about some of the cost inefficiencies that had crept into the system.
So I think overall good trends there. I think a dual part of reconditioning. There’s cost and then there’s production capacity. And so Q3 was a quarter where we did make gains in production capacity. We set a record for units produced in the quarter. It was our first quarter producing more than 200,000 units in a single quarter. That’s a nice milestone. Our year-over-year growth in production also accelerated slightly relative to Q2, which I think is the direction that we want to head.
And we slightly outproduced retail units sold in Q3, which is also definitely a direction that we want to head. So I think we made some nice gains in production. Having said that, there’s still more work to do and continuing to increase production capacity is going to be a key area of focus as we look forward. As one example of that, growth in the number of cars that are on the website immediately available to customers is still up year over year at a rate that is much below what our sales growth is year over year. And so that’s something we want to change. And we’re going to continue to invest in getting the right people, process, and systems in place in the reconditioning centers to efficiently scale production.
Marvin Fong (Analyst at BTIG)
That’s great. Thanks so much, Mark.
OPERATOR
The next question comes from Daniela Hagan with Morgan Stanley. Please go ahead.
Daniela Hagan (Analyst at Morgan Stanley)
Great. Thanks for taking the question, Mark. First one for you. Where do you think the biggest area of opportunity is in SG&A for leverage? And can you kind of talk through the puts and takes? You know, ad spend is higher, as you mentioned, on a per-unit basis. Assuming that remains similar into the fourth quarter and fuel costs remain elevated, how should we think about other line items leveraging? Thank you.
Mark Jenkins (Chief Financial Officer)
Sure. Yes. I mean, I think if we take a step back and think about the opportunities through the entire SG&A stack, I think there’s opportunities in every area. So let me start with overhead. We do have a high fixed-cost business where we make significant technology investments. We have large investment in infrastructure that we think levers well over time. And so see, you know, significant opportunities to further lever overhead expenses over time.
I think that’s an area where we have shown, you know, really significant leverage over the past several years as well, but do believe that’s an area that affords significant further leverage as we look out over time on a per retail unit sold basis. Next, I’ll talk about advertising expense. You know, we’ve made, you know, the point before that advertising expense is a place where, not necessarily in the near term, but certainly in the longer term, we see opportunities for meaningful advertising leverage as we continue to raise awareness, understanding, and trust, build out our selection, improve speeds, et cetera, enhancing the customer offering. A good data point on that is just the fact that our most mature markets that have the most nearby inventory at the fastest delivery times have historically had much lower advertising expense per unit than the company as a whole.
And so advertising, not necessarily in the near term, but certainly in the long term, is a significant SG&A leverage opportunity. Last, I’ll talk about operations expenses. So operations expenses, you know, did tick up in Q3. I think fuel and logistics cost was definitely a component of that and certainly the largest component of that. And so that, you know, that bucked sort of a longer-term secular trend on, you know, operations expense per unit declining. I think if we look, you know, in the longer term, there’s significant opportunities there driven by AI and by scale and logistics network density that can cause operations expense per unit to come down on a per retail unit sold basis in the fullness of time as well.
So, you know, that’s a, you know, a lot of different components, but really as we do look across those major SG&A categories, we see opportunity for leverage as we look out, you know, into the future.
Daniela Hagan (Analyst at Morgan Stanley)
Great, thanks. Thanks, Mark. Second one is for you, Ernie. You mentioned in opening remarks opportunities in agentic AI. What’s the opportunity for Carvana there? How are you positioning the business to capitalize on that shift in consumer behavior?
Ernie Garcia (Founder and CEO)
Sure. Well, first I would say that we were excited by the fact that we think that we’ve been positioning the business for that kind of a shift for 14 years. And I think, you know, what agentic AI is basically just putting, you know, general AI capabilities that can also take actions into the pockets of consumers. And we think it does a lot of things that are, that are very good for us. We think just through habit formation in general, it pushes people more in the direction of digital transactions.
And then we think that it also as a general matter has kind of the capacity to effectively reduce digital friction to zero while leaving physical friction largely unchanged. What I mean by that is if a customer comes to Carvana through their agent and we’re able to verify that the agent has a customer behind it and that agent has access to, to everything that’s necessary for that customer to get a trade-in value and knows which cars to shop for and is able to apply for credit and has access to their documents to provide information we need for verifications, the customer’s experience there is going to basically be: We found the car.
Here’s the picture, here’s the trade-in value, here’s how it compares to benchmarks. We applied for financing. Here’s your down payment and your monthly payment with the trade-in applied. If you’d like this one, it can be here today. If you want this one, it can be here tomorrow. And if you want one of these two, it can be here in two days. And it’s kind of say yes or no. It’s kind of like the logical extreme of where that can go. I think when you compare that to what we compete with, which is what’s important. Whatever the technological change, what matters is what we can do, but also what the competition can do. The experience the customer is going to get is likely to be very different. First of all, the odds that the agent can even find, find a car that is similar in the entirety of the city is not certain. I think in many large metropolitan areas today with the inventory that we have, we already have more cars than the sum of dealers in many, many areas.
And that’s a strength that continues to get stronger. So there’s, the agent will figure out what’s the best match that it’s got. Then it will probably say here’s the process to get a trade-in value. If you go in, this dealer has this, you know, doc fee associated with it and they may have additional add-ons that are either part of the car that you’ll run into as you go through that process. You know, make sure you keep me in your pocket so I can keep you informed along the way.
You know, we don’t, we can’t yet see what your interest rate’s going to be, but given benchmarks and tools that we can find online, here’s roughly what we think the range is likely to be. If you’d like to apply for a loan before you go, here’s a series of steps that you can go through and so you can kind of see where, you know, not only is it reducing the digital friction, it is also fully revealing and articulating the physical friction. And so we think that’s a huge advantage for us. We think, you know, like we said in the pre-remarks, if we were building from scratch today, we would build Carvana. And so we think it’s a huge opportunity for us. We’re excited by it. I think it’s very early days. I think it’s one of many tools that will be in the pockets of consumers over time. And we think the sum of those tools is just going to put pressure on businesses to build fundamentally better solutions.
And we’re 14 years into building a completely different supply chain and completely different approach to this business that is more efficient and more vertically integrated and benefits from all these changes. So we’re extremely excited by it.
Daniela Hagan (Analyst at Morgan Stanley)
Awesome. Thank you, Ernie.
Ernie Garcia (Founder and CEO)
Thank you.
OPERATOR
The next question comes from Brad Erickson with RBC Capital Markets. Please go ahead.
Brad Erickson (Analyst)
Hey guys, thanks. Just two on the other GPU. I guess just anything about gain-on-sale levels going forward and kind of across your three major selling channels there, you know, just what should we expect in terms of these levels going forward, kind of in the 7% range? And then, you know, how will each of those channels kind of perform within that? And then second, you know, you upsized the ABS deal. I think you did during the quarter for the first time. And the question is, should we expect future deals to look like that? And if so, you know, what would you recommend investors read into a deal that gets upsized versus one that does not? Thanks.
Mark Jenkins (Chief Financial Officer)
Sure. So let me start with—you framed the question in kind of premium space instead of dollar space, and I think that it’s useful to look at it both ways. I think, you know, over the last year or so, as we’ve given rate back to customers, and that rate has been disproportionately in the primary, we’ve seen more prime customers and we’ve seen more expensive transactions. That has also kind of served our inventory goals over that period. So it is natural that we move in that direction.
Oftentimes premiums go down, but they’re applied against a bigger balance. And so if you look at it in dollar space, that line item is a line item that I think—it’s an exercise that I would suggest everyone is go look at the last 12 quarters, graph that out over time, and just look at the stability in the absolute dollars. It bounces around inside of a very, very tight range. And I think if you look at it over a longer period than that, as a general matter, it’s been upward sloping as we’ve continued to find fundamental gains and get more efficient as a business and add various loan buyer partners that lower our effective cost of funds.
So I think we will continue to utilize these different channels that we’ve got. We’ll continue to seek out fundamental gains in every part of the finance flows. But I think, you know, something that we’re very excited by is I think, you know, this line item that obviously gets a lot of attention, and there’s a lot of numbers that bounce around quarter to quarter that people can, you know, watch and kind of push through the math. Despite all of that, we think the most important thing is we found a lot of stability there.
And it’s because the platform that we’ve built generates a lot of real fundamental value, and then we’re able to capture that value while also passing value back to our customers.
Brad Erickson (Analyst)
Understood, thanks.
OPERATOR
The next question comes from Michael Baker with DA Davidson. Please, go ahead.
Michael Baker (Analyst at D.A. Davidson)
Hey, thanks. I just wanted to follow up on the agentic question and, you know, understanding the advantage you guys have, but where are you with that now? Is there anything that you need to invest in to take advantage of that? You know, because if you just sort of—I know it’s very early in this whole process, but if I just did a random sample of going on to some of these bots and say, you know, find me a used car, you guys come up sometimes, but your competitors still come up quite a bit as well.
So I’m wondering what you need to do to invest to take advantage of your benefits.
Ernie Garcia (Founder and CEO)
Sure. Well, I think there’s a series of things that probably sit underneath that question, and I think the one that you specified there was the search question. We think we’ve got to make our cars readily available. We’ve got to make sure we’re pushing out data in all the ways that these different bots can see it. We’ve got to make sure that we continue to see scale and get our information out there. And I think there’s lots of things that go into that.
But I think the great news is that the bigger we get, the more often we’re going to show up in all those different places. And then I think in terms of changes to the underlying business, there’s really not a lot of fundamental things that we need to change. A lot of these tools are tools that we use ourselves. A lot of these tools are tools that are now in the hands of consumers. But because our entire consumer-facing system is deterministic and we can present all of the information for every part of the transaction through an API to any part of our website, any UX that we create on our website, or any UX that is available to consumers through whatever bots they have, it’s very straightforward.
And then because the underlying processes for even how we do a lot of the operational things that touch customers are all pushed through a wire—there’s customer care work, verifications work, title and registration work that is done in a way where we have articulated all the rules, we have made clear exactly what documentation we need, we have business rules and flows where data is pulled off of paper and pushed through those flows to get us to answers—that also means that we’re very well positioned to utilize these tools in our business itself because the underlying systems are already there and the underlying rules are already articulated inside of a system that’s able to execute against them.
So we think in customer-facing ways and in our own managing of the business, we just think there’s opportunities to get better everywhere. And I think like everything else we’re working on in the business, it’s just a matter of prioritization and how well we execute. But the opportunity is all over the place.
Michael Baker (Analyst at D.A. Davidson)
Yeah, makes sense. Appreciate the color. Thank you.
Ernie Garcia (Founder and CEO)
Thank you.
OPERATOR
The next question comes from John Healy with North Coast Research. Please go ahead.
John Healy (Analyst at North Coast Research)
Thanks for taking the question and congrats on the progress. Ernie, I wanted to ask your thoughts on the FTC dynamics in the quarter. Would love to get your thoughts on how you see the industry kind of evolving from here. Do you think the industry is kind of caught up now in terms of practice? Do you feel like your position is strengthened by this, and do you view this as a benefit more to units or maybe even your ability to push ASP and maybe GPU higher?
We’d love to get your thoughts on that topic. Thank you.
Ernie Garcia (Founder and CEO)
Sure. So I think as a general matter, we think this makes it clear for consumers to compare offers more easily for different cars that they can purchase. And we think that directionally that benefits us, whether it’s the kind of doc fee direction or if it’s direction that has also been issued by the FTC around disclosing any additional products that are required to be purchased with the car in the price of the car. So if a car, for example, has tints pre-installed or has fabric protection pre-installed or VIN etching or whatever it is pre-installed, that also is supposed to be disclosed as part of the price.
So we think that that’s helpful because it brings all the information forward in a way that is easier for the customer to see. In many ways that’s not materially different than a customer that has ChatGPT in their pocket or is using an agent to complete these purchases because they also will kind of bring information forward in similar ways. We think for us that that’s great because we think it makes it simpler; it’s upfront and easy for customers to see what they’re getting into and to understand what the steps are likely to be down the path. And so we think that that’s a benefit to us broadly. I think whether it shows up in units or margin, I think is largely a choice. I think to the extent that the value that we offer is easier to discover for consumers, that will generate value. And we, given where we are and given how clear the path is at 13.5%, I think that we would prefer for that value to show up in unit growth.
But that requires that we continue to scale the supply chain as quickly as possible. To the extent that we’re unable to scale the supply chain as quickly as we’d like—which we would like to be scaling it even faster—then it’s likely to show up in margins or somewhere else. But we think as a general matter it’s good for us. And then what I would also say is we feel like the way those economics flow through, if you were to look at the last 25 or 30 years of automotive retail, generally speaking, what has happened is EBITDA margins or net income margins have been relatively flat over a very long period of time. And basically vehicle profits have decreased and F&I profits have increased, and the underlying cost structure of dealerships have been in a similar spot relative to the value of the car that’s being purchased.
And so I think that the simplification of that story is just that dealers have pretty clear cost structures. This is a long-standing, extremely mature industry that has profits that are associated with it that are profit levels that are pretty well established. And the particular place where that shows up just doesn’t matter all that much to the bottom line. So we think to the extent there’s more clarity and these other line items are simplified, what that will likely lead to is just increases in the prices that other dealers list their cars for.
And it probably won’t change the underlying economics very much. So it just aids in price discovery and value understanding for our customers. And we think that’s great.
John Healy (Analyst at North Coast Research)
Helpful, and I’ll take a swing at this. A couple quarters ago you told me to have a different question, but wanted to ask about the franchise dealer model a little bit. Clearly a lot of things have been written about the success you’re having in that vertical. Is that opening doors for other manufacturers and more movement there? Would love to get your thoughts about that expansion opportunity ahead for the company. Thank you.
Ernie Garcia (Founder and CEO)
Yeah, sure. Thank you. Well, I think, you know—apologize to be so cutesy on this—but unfortunately we don’t have a ton more detail to add. I would say, you know, we spoke a bit in our opening remarks about our work there with Stellantis dealerships as kind of being an early indication of, you know, the platform value that we’re building. We think that we have built a platform that has real value to it. You know, the customer offering that we provide to customers is very clear and it’s very high quality, and it’s very clear that customers like it.
The economics work. So I think there’s a lot of good things there, but it’s also very early in the game and we’ve still got a lot to learn.
John Healy (Analyst at North Coast Research)
Thank you so much.
Ernie Garcia (Founder and CEO)
Thank you.
OPERATOR
The next question comes from Sharon Zaxier with William. Please go ahead.
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