Investing.com -- Carvana has expanded its new car retail operations to cover up to half of the US population through just seven Chrysler, Dodge, Jeep, and Ram dealerships, according to a Friday note from BTIG.

The company launched its new car retailing vision in mid-June at its Dallas, Texas dealership and recently added a new car filter to carvana.com. BTIG found that 15 of 16 major US metro areas searched had new car inventory available with free shipping.

BTIG noted that Carvana's logistics network allows it to achieve coverage with seven stores that would typically require 100 to 150 traditional dealerships.

The expansion faces some constraints. Stellantis (NYSE: STLA) holds just 8% of the new car market, and the automaker has limited how many dealerships Carvana can purchase in a rolling 12-month period. Questions remain about selling to customers located in other dealers' Primary Market Areas.

Carvana's internal data shows approximately 75% of new car sales come from buyers initially looking at used cars, suggesting the company is expanding the market rather than taking existing share.

BTIG estimates new car gross profit per unit ranges from $5,500 to $7,500, with $1,500 to $2,000 coming from parts and service operations. The firm projects new cars will represent less than 10% of Carvana's units even in a high volume scenario and should be modestly dilutive to company-wide gross profit per unit by less than 3%.

The dealership ownership provides used inventory flow, generates cash flow from parts and service, and creates a consumer touchpoint for future used car demand, BTIG said.