Carvana Is Still Losing Money Because Used Car Demand Keeps Dropping

Tempe, Arizona-based Carvana has announced both fourth quarter and full 2022 year results, and the final figures are not great. It recorded a net loss of $806 million in Q4 alone. For all of 2022, the used car retailer lost a grand total of $1.6 billion. Revenue in Q4 came to $2.8 billion, a decrease of 24% compared to Q4 2021. Carvana reported a total 2022 revenue of $13.6 billion, a 6.2% increase from the year prior.

A total of 86,977 vehicles were sold in Q4 2022, a 23% decrease. Carvana profited $2,219 per vehicle in the fourth quarter, which is down from the same time last year by 51%. For all of last year, Carvana sold 412,296 vehicles, which may sound like a lot, but it's actually a 3% decrease from 2021.

Per vehicle, its yearly profit came to $3,022, a decrease of $1,515 from 2021.

"Nothing worth doing is easy. Building Carvana has been no different. 2022 has reminded us of that again," said Ernie Garcia, CEO and founder of Carvana. "It has undoubtedly been a challenging time, but like the challenges we have faced before, we are up to the task. Over the next 6 months, we will work to complete an estimated $1 billion in annual cost reduction, and we will do it while not only maintaining but actually improving our customer experiences."

The retailer managed to reduce its inventory in Q4 by around 27% and aims to continue doing so during Q1 2023. Founded a decade ago, Carvana has been on a mission to revolutionize the way Americans buy and sell used cars. Its so-called "car vending machines" have given the company instant recognition.