Carvana to slash 1,500 jobs, cites economic headwinds
Carvana laid off around 2,500 employees earlier this year
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Carvana Co. is cutting 1,500 jobs, or about 8% of the used-car retailer's workforce.
In an internal memo reviewed by FOX Business, CEO Ernie Garcia said while the changes were "painful," Carvana had faced "strong" economic headwinds from higher financing costs.
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He explained that leadership had "failed to accurately predict how this would all play out and the impact it would have on our business" and apologized to people who were affected.
MIAMI, FLORIDA - MAY 11: A Carvana used car "vending machine" on May 11, 2022, in Miami, Florida. ((Photo by Joe Raedle/Getty Images) / Getty Images)
The job cuts affected employees in corporate, operations and technology teams.
CNBC first reported the layoffs.
To support people who were being let go, Garcia said in all cases, to help with the transition, separation and severance pay would be provided through Jan. 1, as well as one additional week of severance pay for every full year of tenure.
Health care coverage will be extended for three months and employees will be given priority consideration once the company begins hiring again.
A computer monitor displayed available vehicles inside the Carvana Co. car vending machine in Frisco, Texas, U.S., on Thursday, June 8, 2017. (Photographer: Laura Buckman/Bloomberg via Getty Images) (Photographer: Laura Buckman/Bloomberg via Getty Images / Getty Images)
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In addition, former employees will be eligible for the employee vehicle purchase program for the next year.
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Shares of Carvana extended losses after Friday's announcement and were 7% lower in afternoon trade.
This all comes as demand for used cars has been negatively impacted by hybrid working models and higher costs due to rising interest rates.
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Earlier in the year, Carvana laid off around 2,500 employees.
The Arizona-based company said its executive team would forego their salaries for the rest of the year.
Reuters contributed to this report.