Used car demand is falling, leading Carvana Co. to announce a second round of job cuts, expected to impact about 1,500 employees or 8% of its workforce.
The layoffs mainly impact employees in Carvana’s corporate, technology and operation departments.
Earlier this year, Carvana laid off around 2,500 employees, or 12% of its workforce.
Carvana CEO Ernie Garcia reported in an internal memo, obtained by CNBC, that higher financing costs were leading to drops in used car sales. The CNBC report also noted that Carvana "failed to accurately predict how this would all play out and the impact it would have on our business.”
The Tempe, Arizona, company reported in a regulatory filing that the workforce reduction matches the company's size with current economic conditions to achieve financial goals,
The company reports hybrid-working models and higher car payments because of rising interest rates have caused consumers to rethink personal mobility options and trim their daily expenses.
Weaker than expected demand has forced Carvana to sell many used cars at lower prices than they paid for them earlier this year. This climate has lowered earnings results for the company over the last give quarters, raising investor concerns and lowering share values.