Carvana, the used car dealer founded ten years ago whose rapid growth been encountered a lot of problemssaid on Tuesday it would lay off 2,500 employees, with executives remaining unpaid for the rest of 2022.
In a filing with the Securities and Exchange CommissionCarvana called the move a “size correction” initiative.
On May 10, 2022, Carvana Co. (“Carvana”) announced a workforce reduction of approximately 2,500 employees, primarily in operating groups, as part of its previously announced plans to better align staffing and expense levels. on sales volumes.
All affected team members will have the opportunity to receive four weeks’ salary plus an additional week for each year spent with Carvana. Affected team members will also have the option of extended medical coverage, salary equal to early vesting of certain previously granted stock awards, recruitment and resume support, and continued participation in certain other company programs. The management team is forgoing salary for the remainder of the year to help with severance for departing team members.
We believe that these decisions, while extremely difficult, will allow Carvana to restore a better balance between its sales volumes and its workforce and will facilitate Carvana’s return to effective growth as part of its mission to change the way people buy and sell cars.
Separately on Tuesday, a Redditor post what they said was an email sent to employees of Carvana, which says that various industry stresses – supply chain issues, higher interest rates and inflation, and slower car sales in because of “unprecedented car prices” – meant that The growth of Carvana been slower than expected. The email, which we have not verified but which appears to be legitimate, also indicates that the layoffs represent approximately 12% of Carvana employees and offers the same information on severance payments for the affected employees contained in the file of the SEC.
The layoffs were probably inevitable given that Carvana announced its first ever drop in sales in April this year—a year when prices and demand for used cars are still at all time highs. It should be noted that alongside the revelation of these massive layoffs and executive pay cuts, Carvana announced this morning that she pay $2.2 billion to acquire auto wholesaler Adesa US., which operates 56 auction sites across the country.