The reduction in retail vehicles sold is driven mainly by higher interest rates, lower inventory size, less advertising and the company’s “focus on profitability initiatives,” Carvana said in the filing.
It estimated first-quarter revenue will be between $2.4 billion and $2.6 billion, down from $3.49 billion in the year-earlier period.
Carvana also said its total gross profit per vehicle sold may land between $4,100 and $4,400, significantly higher than $2,985 in the year-earlier period. Carvana said its total per-vehicle profit estimate factors in a period of higher wholesale gross profit, which occurred in the first few months of 2023 as vehicle demand strengthened and wholesale prices appreciated.
CarMax Inc., another used-vehicle retail giant, reported last month that it prioritized per-vehicle profit preservation, also at the expense of some sales volume, in its fiscal fourth quarter, which ended Feb. 28.
In a research note published last week, equity analyst Sharon Zackfia at William Blair & Co. said the firm expects the first quarter to mark a trough in Carvana’s used-vehicle sales. The firm lowered its second-quarter estimate of used-vehicle sales by 2,300 to 86,200. The retailer sold 117,564 vehicles in the second quarter of 2022.
Carvana shares were up 4.04 percent to $7.21 at the Tuesday market close. A year earlier, the stock traded for more than $60 a share after peaking above $360 in 2021.
Bloomberg and Reuters contributed to this report.
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