Used-car retailer Carvana Co. is cutting 1,500 jobs, or 8 percent of its workforce, the company said on Friday, amid waning demand for used cars on the back of sky-high prices and supply shortages.
Demand for used cars has been negatively impacted 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.
CNBC, which first reported the layoffs, cited an internal memo, that the company faced economic headwinds from higher financing costs and it “failed to accurately predict how this would all play out and the impact it would have on our business.”
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.
The Tempe Arizona-based company, best known for its automated car vending machines, earlier this year laid off around 2,500 employees, or 12 percent of its workforce, and said its executive team would forego their salaries for the rest of the year.
The job cuts mainly impact employees in Carvana’s corporate and technology departments, CNBC reported.
Carvana, whose shares were down 5.4 percent in afternoon trading, has missed expectations for adjusted earnings in the last five quarters, per Refinitiv data.
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