8:51 am, May 5, 2023
Online used car dealer Carvana has managed to reduce its losses – and expects to make a profit soon.
The Arizona-based outfit yesterday reported a $286m (£227m) net loss for the first quarter – down from the $506m (£401m) deficit it recorded for the same three months in 2022 – thanks to cutting costs as well as advertising expenses.
It was also massively down from the $1.44bn (£1.14bn) loss of the last quarter.
Carvana’s revenue, meanwhile, dropped by just over a quarter to $2.61bn (£2.07bn), which was in line with estimates.
The company is now predicting an EBITDA profit during the second quarter, according to Reuters. It also plans to further reduce excess stock.
Reuters quoted CEO Ernie Garcia as saying during an investor call: ‘We’ve already got our plans for the next nine to 12 months to keep the pedal down and keep making a lot of progress in unit economics.
‘It is clear our strategy and execution are working, as evidenced by our 61 per cent increase in gross profit per unit, the best first-quarter GPU in company history.’
He added: ‘We still have a long way to go to achieve our broader goals, but we are on the right path, and we are moving quickly.’
Carvana, which is famous for its car-vending machines, has been struggling to sell cars and has taken various measures, including job reductions, over the past year.
As in the UK, the online US used car market boomed during Covid lockdowns when people were stuck at home.
However, more recently, Carvana – which is now 10 years old – has been struggling to shift cars that it bought at inflated prices in 2022.
Used car prices in the USA have been much more volatile than here over the past year.
Auto Trader told Car Dealer earlier this year that UK car dealers shouldn’t expect to see major price fluctuations affecting the used car market here as they have in the US.
