Car rates

Carvana to step up cost-cutting after losses

Business leaders aren’t sure what to expect for near-term industry volume in light of the economic factors affecting the used-vehicle market, Garcia said. He cited a combination of inflationary pressures, rising interest rates and fluctuating consumer confidence as hampering Carvana’s volume growth in the first half of 2022. Demand also fell across the sector in July, a he declared.

Price depreciation has returned to the used-vehicle market this year, Garcia said.

“Given that car prices have inflated more than other goods and services, it is likely that on average they will depreciate faster in the future to realign with their relationship to other goods and services,” he said. he declared.

Carvana’s operating expenses were $721 million in the second quarter, down slightly from $727 million in the first quarter.

The company saw a quarter-over-quarter increase in logistics spending, much of which went to third-party transportation services that Carvana used to “eliminate certain backlogs from the logistics network in particularly constrained areas,” it said. said Jenkins. He said he did not expect Carvana to bear logistics costs at such a high level in the third quarter.

Carvana continues to integrate ADESA US, the vast physical auction network it purchased on May 9 from wholesale auction company KAR Global.

The blockbuster $2.2 billion deal drew mixed reactions when it was announced in February. Some car manufacturers and dealers have chosen to end their business with ADESA US since Carvana is a formidable competitor in the used vehicle sector.

Garcia acknowledged that some US ADESA customers initially reacted negatively to the news and the auction unit lost volume as a result. But since then a number of customers have returned, he said last week.

“We’ve seen some large commercial accounts start to redirect their business more to ADESA,” Garcia said.

He did not specify the companies or the volume of return. Carvana officials did not respond to questions from Automotive News search for this information.

Garcia said he believes the reach of ADESA’s 56-site U.S. network “greatly simplifies” the company’s logistics and could help reduce transportation costs.

“When we buy a car from a customer and are able to drop it off at nearby ADESA [location] instead of having it go through our logistics network, we can save significant dollars per transaction there,” Garcia said.