"Right now, it's pretty clear demand is significantly higher than the sales that we're seeing flow through the system," Garcia said. "And we think that in the immediate term, at least, our ability to produce cars is going to directly drive the number of cars that we're able to sell."
The company had 5,914 retail-ready vehicles on hand at the end of the second quarter, marking its lowest level since the third quarter of 2018. The low inventory is the result of several factors related to the coronavirus pandemic.
Early on in the crisis, Carvana paused purchasing and preparation of used vehicles to limit financial risk. That led to lower inventory later in the quarter when demand came roaring back, and it remains elevated into this quarter.
At the same time, the pandemic has been flaring up in parts of the country where Carvana has its vehicle inspection and reconditioning centers. This has led to some difficulty in beefing up staff quickly enough to turn around incoming vehicles and make them ready for retail.
Carvana said it is working to hire and train staff at the centers to alleviate some of the pressure. It also opened a new center — its ninth in the U.S. — in Columbus, Ohio, during the quarter. It plans to open two more by the end of the year, which will grow its capacity of about 500,000 vehicles to 600,000.
Carvana also expanded to 100 additional markets in the period, most of which are adjacent to existing markets, giving the company a total of 261 at the end of the quarter and coverage of about 73 percent of the U.S. population.
Carvana's second-quarter revenue grew 13 percent to $1.12 billion. Retail sales were up 25 percent to 55,098. The company's net loss increased 66 percent to $106 million.
Investors initially seemed to remain bullish on the company after the latest results. However, after rallying on Thursday, Aug. 6, Carvana's stock fell 14 percent to $192 on Friday, Aug. 7. But that's still just under double the $96.95 price at the beginning of the year.