Carvana (NYSE:CVNA), CarMax (NYSE:KMX), Openlane (NYSE:KAR) and ACV Auctions (NASDAQ:ACVA) compete against each other, and Amazon (NASDAQ:AMZN), over trillion-dollar used car market

Buying a used car can be a fraught process full of unknowns as shoppers do their best to navigate a complex network of dealerships and data in an effort to get a good price, and avoid the proverbial lemon. Both newer players like Carvana (NYSE:CVNA) and more established firms like CarMax (NYSE:KMX) have been working to make the process easier in a race to become the next big platform, with the size of the prize obvious to all. The industry is worth nearly $1.2 trillion a year in the US and Europe alone.

CarMax uses a hybrid model that allows prospective clients to visit one of its 240 locations in 41 states in addition to online sales, which accounted for 14% of its retail sales units last quarter. Carvana only offers online sales, and customers can opt to pick up a car they purchase at one of its specialty car vending machines. Nationwide dealerships like AutoNation (NYSE:AN) and Lithia Motors (NYSE:LAD) allow users to search through inventories of both new and used cars and then be connected to local sales offices for more information. CarGurus (NASDAQ:CARG), meanwhile, operates a platform that connects buyers with sellers and uses algorithms to help users sort through its 5 million listings. 

On the more specialized end of the spectrum are Openlane (NYSE:KAR) and ACV Auctions (NASDAQ:ACVA), which operate wholesale marketplaces dealerships can use to keep used sales within their own networks and retain more value. They’ve seen returns over the past year of 26% and 30%, respectively, and are well positioned to help dealers access what McKinsey says is a $22 billion opportunity to maximize margins by leveraging real-time market data to optimize bidding prices.  

The world’s most famous online retailer, Amazon (NYSE:AMZN), this year began letting auto dealers sell the Hyundai brand in its US store. The company, since its founding in 1994 as a book retailer, has slowly expanded the product categories it offers and gone on to disrupt entire industries as a result.

There are lots of companies aiming to be the Amazon of used cars, but Amazon itself could end up being the ultimate wildcard.