Carvana, CarMax pressured by ‘abrupt end’ to pandemic used-car boom, NYT says

About a year ago, the pandemic and a semiconductor shortage forced automakers to stop or slow production of new vehicles, pushing consumers to used-cars, where prices surged. However, the used-car business is now "suffering a brutal hangover" as improved auto production has eased the shortage of new cars and Americans are buying fewer cars due to rising interest rates, fears of a recession and tighter budgets, wrote Neal Boudette for The New York Times. The "industry’s difficulties have been exemplified" by Carvana (CVNA), which recently reported a quarterly loss of more than $500M, laid off 4,000 employees and piled up debt in the last 12 months, the report said. In a statement to The New York Times, Carvana said it was confident it had "sufficient" funds to turn its business around, noting the company had $2B in cash and an additional $2B in "other liquidity resources" at the end of the third quarter. "Millions of satisfied customers have responded positively to Carvana’s e-commerce model for buying and selling cars. Although the current environment and market has drawn attention to the near term, we continued to gain market share in the third quarter of 2022, and we remain focused on our plan to drive to profitability," the company said. CarMax (KMX) is "also hurting, although it is on much steadier ground," the report added. Reference Link