Carvana Co. said Thursday it recorded a net loss of $508 million in the quarter ending Sept. 30, noting it continues to grapple with inflationary pressures and rising interest rates that are causing consumer demand for used vehicles to wane.
The loss is larger than both Carvana's $506 million first-quarter loss and the $68 million loss it posted for the same period a year ago. The Tempe, Ariz.-based company said high used-vehicle prices and rising interest rates, in particular, led to softening demand as consumers zeroed in on affordability. The online used-car giant also said the current interest rate environment forced lower sales conversion rates and fewer profits per vehicle sold, resulting in fewer profitable sales.
Carvana generated revenue of $3.4 billion for the quarter, down 3 percent compared with the same period a year ago. The retailer sold 102,570 cars and trucks in the third quarter, down 8 percent. The profit it made per vehicle retailed fell to $3,500 — down $1,172 from $4,672 in third-quarter 2021.
In a letter to shareholders, Carvana CEO Ernie Garcia and CFO Mark Jenkins said the company made some of the "most significant operational progress" it has ever made, but that "the increasingly challenging environment presented headwinds that inhibited that progress, allowing only a portion to show in our financial results."
That environment, the executives wrote, "has continued to get increasingly difficult since the end of the quarter and it is probable things will continue to get more difficult before they get easier."