How Ernest built the fortune
Ernest Garcia III, usually called Ernie, built his fortune on the idea that buying a used car could work like ordering anything else online. Carvana, which he co-founded in 2012, lets customers browse inventory on a website, arrange financing, trade in their old vehicle and either have the new one delivered to their door or collect it from a multistory glass tower that dispenses cars like a vending machine.
The company started as a project inside DriveTime, the used car dealer and lender controlled by his father, Ernest Garcia II, and was spun off as a separate business. That origin gave Carvana access to existing reconditioning, financing and servicing operations in its early years. Carvana went public on the New York Stock Exchange in April 2017, and the Garcia family kept control through a class of shares with extra voting rights.
The path since then has been volatile. Carvana grew rapidly during the pandemic used car boom, then came close to running out of cash in 2022 as interest rates rose and car prices fell, and its shares lost almost all of their value. A debt restructuring in 2023, deep cost cuts and a return to profitability brought a sharp recovery, and the rebound in the stock is the main reason for the size of Garcia's fortune today.
Companies and holdings
Garcia is chief executive and chairman of Carvana, based in Tempe, Arizona. Its main parts are:
- The online retail platform and a network of inspection and reconditioning centers.
- Car vending machines in cities across the United States, including the first coin operated tower, opened in Nashville in 2015.
- Auto financing, with loans sold to investors through securitizations.
- The ADESA US wholesale auction business, acquired in 2022, which added physical sites for reconditioning.
His wealth is concentrated in Carvana shares. His father separately owns a large stake in Carvana and controls DriveTime and Bridgecrest, which services Carvana's auto loans.
Early life and career
Ernie Garcia grew up in Arizona, where his father built DriveTime into a major buy here, pay here used car dealer and lender. He studied management science and engineering at Stanford University, graduating in 2004.
After college he worked at RBS Greenwich Capital in Connecticut, trading asset backed securities, which gave him a working knowledge of how auto loans are packaged and sold to investors. He then returned to Arizona to work at DriveTime, where he held roles in finance and strategy, including serving as treasurer. Seeing how slow and opaque traditional car buying was helped convince him that an online retailer could take market share from conventional dealerships. He launched Carvana from within DriveTime, with early operations in Atlanta.
Philanthropy and public life
Garcia's personal philanthropy is not widely publicized, and he does not run a high profile foundation. Carvana has supported local causes in Phoenix and in markets where it operates, and the company has promoted programs for hiring military veterans and training reconditioning technicians.
He and his father have faced criticism over the relationship between Carvana and Garcia family companies, including DriveTime and Bridgecrest, and over sales of Carvana stock by his father. Short sellers and some investors have questioned related party transactions and the company's lending practices, while Carvana has defended its arrangements as properly disclosed and approved. His father's earlier career included a guilty plea related to the Lincoln Savings scandal in the early 1990s, which is frequently mentioned in coverage of the family.
As chief executive, Garcia is known for long term thinking and for writing detailed annual shareholder letters that explain Carvana's strategy and unit economics. He has argued that vertical integration, from buying cars to reconditioning, financing and delivering them, gives Carvana a structural cost advantage over traditional dealers.
The company's survival in 2022 and 2023 is often studied as an example of a dramatic corporate turnaround. Garcia remained chief executive throughout, and Carvana's recovery has made him one of the most closely watched executives in American retail. He has said that the company's goal is to become the largest and most profitable automotive retailer in the country.