Tempe-based Carvana announces plan to lay off 2,500 employees
May 10, 2022, 3:00 PM | Updated: 3:02 pm
PHOENIX — Tempe-based Carvana said on Tuesday in a regulatory filing it planned to lay off 2,500 employees, a move that will cut more than 10% of its staff.
Affected employees will get four weeks of pay plus an additional week of pay for every year at the company, according to the filing.
Carvana didn’t make clear when the layoffs would go into effect.
“We believe these decisions, while extremely difficult, will result in Carvana restoring a better balance between its sales volumes and staffing levels and facilitate Carvana returning to efficient growth on its mission to change the way people buy and sell cars,” a company spokesperson told KTAR News.
The announcement came on the same day the online vehicle retailer said it had finalized its $2.2 billion acquisition of U.S. auto auctioneer Adesa, according to the Phoenix Business Journal.
Carvana’s share price has fallen sharply since the company announced the Adesa deal in February, and analysts expressed concerns when terms of the deal were announced in late April, after buyers were found for $3.275 billion in unsecured notes due in 2030 with a hefty 10.25% interest rate.
The shares were valued at more than $105 as recently as April 13, and today are worth less than $37.
Carvana purchased the assets of Adesa U.S. from Indiana-based KAR Global, consisting of 56 U.S. vehicle auction locations totaling approximately 6.5 million square feet of buildings on more than 4,000 acres.
“We aim to use this Adesa U.S. alignment to both improve the experiences of the Adesa U.S. physical auction customers and to focus on significant and sustainable efficiencies, and unit economic improvements, for Carvana to catapult back into rapid profitable growth as the industry inevitably rebounds,” Ernie Garcia, Carvana founder and CEO, said in a statement to Phoenix Business Journal.