Carvana is reportedly cutting more staff as the used car market continues to downshift.
The online used car retailer is both cutting jobs and reducing hours as it slashes costs in the face of sales that are slower and prices that are lower after surging during the pandemic, The Wall Street Journal (WSJ) reported Friday (Jan. 13).
Carvana did not immediately reply to PYMNTS’ request for comment.
This reduction follows Carvana’s elimination of 2,500 jobs, or 12% of its workforce, in May and another 1,500 jobs in November.
At the time of the second round of job cuts, Carvana CEO and founder Ernie Garcia said: “We plan to continue to rapidly reduce expenses, to continue to put our focus on efficiency gains throughout every area of the company, and to continue to evaluate and test what levers we should pull to maximize the number of our more profitable sales and to minimize the number of less profitable sales.”
The latest in the series of cost reductions comes as Carvana works to manage a $7 billion debt load, rising interest rates, sharply falling sales and an inventory of used cars that has been losing value, according to the WSJ report.
The report comes at a time when car dealer sentiment is at its lowest level since the start of the pandemic.
More dealers see the market for cars as weak than those who see it as strong due to concerns about the economy, interest rates and consumer’s shunning of big-ticket purchases, Cox Automotive said in December.
“Dealers are normally optimistic, so the drop in the three-month outlook to a new low in our survey history is particularly noteworthy,” Cox Chief Economist Jonathan Smoke said at the time.
Used car retailer CarMax reported Dec. 22 that it saw an 86% drop in profits and a 22% slump in sales as consumers changed their attitudes toward buying and financing big-ticket items.
In the case of Carvana, the firm broadened its business model to include wholesale auction platforms and financing while consumers pivoted to online platforms to buy cars during the pandemic, only to see the growth in the top line stall out, putting it into a downward spiral.
For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More