PHOENIX — Online used-car retailer Carvana reported record quarterly sales and profits as more consumers continue shifting away from new vehicles amid persistently high prices.
Carvana said it sold approximately 197,000 vehicles during the second quarter, a nearly 40% increase from a year earlier. Net income climbed to $310 million from $183 million, while revenue rose 52% to $7.38 billion, the company reported.
Despite the strong results, Carvana’s shares fell in after-hours trading after the company projected full-year earnings of $2.7 billion to $3 billion, below some analysts’ expectations of more than $3 billion, the Wall Street Journal reported.
The company said the quarter marked its 10th consecutive period of sales growth, with retail vehicle sales roughly doubling over the past two years.
Response to High Prices
According to the Journal, and as the CU Daily has reported, Carvana is benefiting as many Americans balk at paying an average of about $50,000 for a new vehicle. Roughly 1 million annual buyers have exited the new-car market since the COVID-19 pandemic, opting instead to purchase used vehicles or keep existing cars longer.
Chief Financial Officer Mark Jenkins told investors the company’s outlook remains consistent with prior years and said Carvana has posted growth exceeding 50% in the Midwest and Northeast.
Chairman and CEO Ernie Garcia III told shareholders the company still has significant room to expand, noting Carvana currently accounts for about 2% of the U.S. used-car market.
The Journal reported that Carvana has also experienced stronger-than-expected growth among higher-income consumers, with sales to buyers earning more than $100,000 annually increasing by more than 60% from a year earlier.
Entering New Car Market
The company is also making a cautious move into the new-car market. According to the Journal, Carvana recently acquired several Stellantis dealerships and has introduced a new retail concept that allows customers to shop for Stellantis brands, including Jeep and Ram, using smartphone technology and large digital displays.
Garcia declined to discuss broader expansion plans for new-vehicle sales, telling investors it remains “very early days,” the Journal reported.
