PHOENIX (UPI) — Online used car retailer Carvana plans to lay off 2,500 employees, according to a document filed with the U.S. Securities and Exchange Commission on Tuesday.
The company made the decision to make the cuts, which represent roughly 12% of its workforce, in response to macroeconomic factors that have “pushed automotive retail into recession,” according to the filing.
“While Carvana is still growing, our growth is slower than what we originally prepared for in 2022, and we made the difficult decision to reduce the size of certain operations teams to better align with the current needs of the business,” a Carvana representative told The Hill in a statement.
As a result of the cuts to its operations groups, it plans to “transition operations away” from some of its logistics hubs as well as from its inspection and reconditioning center in Euclid, Ohio.
Carvana will offer four weeks of pay for each affected employee along with an additional week for every year they worked for the company.
In order to “help contribute to the severance pay for departing team members,” Carvana said its executive team will forgo their salaries for the remainder of 2022.
The layoffs come weeks after Carvana reported a $506 million loss in the first quarter.
“We believe these decisions, while extremely difficult, will result in restoring a better balance between the sales volumes and staffing levels and facilitate Carvana returning to efficient growth on its mission to change the way people buy and sell cars,” the filing stated.
Carvana this week also announced plans to spend $2.2 billion to acquire Adesa U.S., a physical vehicle auction business.
“This alignment with ADESA U.S. will further strengthen our foundation for growth and provide us with significant flexibility to execute our plan through a wide range of macroeconomic scenarios,” Carvana founder and CEO Ernie Garcia said in a statement announcing the acquisition.
Reporting by Daniel Uria
United Press International is an international news agency whose newswires, photo, news film, and audio services provided news material to thousands of newspapers, magazines and radio and television stations for most of the 20th century.