If you’ve been keeping up with Automotive News retail coverage, you already know the last two weeks have been chock-full of Carvana Co. developments.
The online used-vehicle retailer, once seen as a rising star in the COVID-19 era, isn’t in an ideal financial or regulatory spot right now.
The big news we reported last week: Carvana cut 2,500 operations jobs, an action analysts viewed as an attempt at much-needed cost reduction after the company reported a wider loss for the first quarter. Illinois also yanked Carvana’s sales license in the state over consumer complaints about vehicle title transfers and temporary tag snafus — issues the company has been cited for in other states.
Several folks in the automotive space have interpreted these developments as evidence that Carvana will fizzle out in the coming months.
Large dealership groups that compete with Carvana began posting job openings on LinkedIn last week, trying to woo former Carvana employees to work for them. In the depths of Twitter and Reddit, some users lambaste Carvana for delayed paperwork and vehicle deliveries, while others suggest the company is on its way to filing for Chapter 11 bankruptcy protection.
Despite the setbacks, Carvana is not finished, according to analysts who spoke last week with me and my Automotive News colleague Lindsay VanHulle. Vroom and Shift Technologies, two other struggling vehicle retailers in the digital market, also can’t be counted out.
Each company has its own set of issues to deal with in the coming months.
Carvana, for instance, must get its recently acquired ADESA U.S. auction sites ready to process more cars and trucks given its plan to lean on those locations for reconditioning and logistics help for its core retailing business. Like its larger rival, Vroom needs to prevent more major financial losses and rein in its titling paperwork problems. Shift, the smallest of the three, must ensure that it has enough liquidity to continue operations.
I readily await the trio’s second-quarter financial results, likely to be reported in early August. In the meantime, I’ll continue to track developments about each company and bring readers the latest at autonews.com.
Dealers, are you trying to hire former Carvana employees or planning to shift your use of ADESA’s auction sites now that they’re under Carvana ownership? Analysts, do you have a fresh take to share on Carvana’s, Vroom’s and Shift’s futures? To Carvana employees whose jobs were axed — what are your next steps? Feel free to enlighten me by sending an email to [email protected].