Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolio

Carvana cuts 8% of workforce on slowing used-car demand

Published 11/18/2022, 11:14 AM
Updated 11/18/2022, 06:12 PM
© Reuters. FILE PHOTO: Carvana logo is seen in this illustration taken June 27, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Nathan Gomes

(Reuters) -Carvana Co on Friday announced another round of job cuts that will impact about 1,500 employees, or 8% of its workforce, as it attempts to cut costs amid waning demand for used cars on the back of rising interest rates.

The company's chief executive officer, Ernie Garcia, said in an internal memo obtained by CNBC that the company faced economic headwinds from higher financing costs.

Carvana also "failed to accurately predict how this would all play out and the impact it would have on our business," added CNBC, which first reported the job cuts, citing the memo.

The workforce reduction was initiated to match the company's size with the current environment and achieve financial goals, Carvana said in a regulatory filing.

The job cuts mainly impact employees in the corporate, technology and operation departments, the company added.

Demand for used cars has been hurt by hybrid-working models and higher costs caused by rising interest rates, as consumers rethink personal mobility options to try and trim their daily expenses.

The weak demand has forced Carvana to sell many used cars at lower prices after having acquired them at a higher cost due to strong demand for personal transportation.

It is now faced with soaring expenses that have led to dour results in the last five quarters, raising investor concerns and sending its shares tumbling this year.

"Carvana's restructuring is a multi-quarter work-in-progress," Baird analyst Colin Sebastian had commented earlier this month after the company reported a bigger-than-expected loss.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

The Tempe Arizona-based company, best known for its automated car vending machines, earlier this year laid off around 2,500 employees, or 12% of its workforce.

Shares of Carvana were nearly flat in evening trade, after closing down 3% on Friday. They are down about 97% for the year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.