Carvana CEO reflects on tough 2022: ‘We’re not a perfect company’

SAN DIEGO – Carvana Co. CEO Ernie Garcia reflected Thursday on the online used-car retailer’s tough year.

“Right around this time last year, I think a number of things started to break against us, and it’s definitely been much tougher sledding since then,” Garcia acknowledged in a video teleconference Thursday at Used Car Week in San Diego.

Carvana’s tumultuous journey in 2022 highlighted by mounting financial losses and a more challenging used-car market is being closely watched. The online giant has been pressed in recent months by waning used-car demand, cash burn, a crashing stock price and regulatory challenges in several states.

One year ago, it felt like Carvana could do no wrong, Garcia said on the teleconference, but it’s a different story these days.

The used market was in a good spot a year ago, and people seemed focused on Carvana’s positives, Garcia said. Today, it’s the opposite — market conditions have worsened, and people are looking at the negatives about Carvana, he said.

“Both things are fine,” Garcia said. “We’re not a perfect company.”

But work is underway to get the retailer back on track, he indicated.

The next one to two years, he said, will entail Carvana “unwinding a lot” of what Garcia described as “odd distortions” at play in the economy the last couple of years.

Those distortions have included prices of used cars and trucks ballooning then starting to moderate, interest rates rising, and consumers’ demand for used vehicles strengthening due to stimulus availability and then weakening as they’ve become more anxious about inflationary pressures, said Garcia, who cofounded the retailer in 2012.

“We’re a 10-year-old company, and I think that in the auto industry, we may have been viewed a little bit differently than we were in, say, capital markets or a venture capital [space] prior to that,” Garcia said. “We were never like a sexy company.”

When the coronavirus pandemic first hit in early 2020, it “completely smacked” Carvana, Garcia said. The world rebounded quickly, though, he said, and Carvana experienced a window in 2020 and 2021 in which it was viewed as an investor “darling.” Carvana even posted its first-ever net profit in the second quarter of 2021.

“We’re now back to a place where we’ve spent most of our lives, and I think, honestly, it’s a comfortable place to be,” Garcia said. “I think it’s what we’re used to, and it’s sort of easier to stay focused and build, and it’s easier to get motivated when people don’t believe in you than when people do.”

Carvana, which went public in April 2017, saw its market valuation soar to $60 billion at one point last year when its stock price topped $360 per share.

The company’s share price closed down 2.7 percent to $8.32 Thursday, giving it a market capitalization of $1.48 billion, according to Yahoo Finance.

Carvana ranks No. 2 on Automotive News’ list of the top 100 retailers ranked by used-vehicle sales, with retail sales of 425,237 used vehicles in 2021.