(CNN) Last year was a disaster for Carvana, the online used car retailer known for its tall glass “car vending machines.” In 2022, the company sold fewer cars than the year before — the first time in nine years — and the company’s losses mounted as the used car market soured.
Overall, Carvana’s losses totaled $806 million, or $7.61 per class A share, compared to $89 million in the last quarter of 2021. For the full year, the company lost $1.6 billion compared to a loss of $135 million in 2021.
Carvana is the second largest used car retailer in America after CarMax by a wide margin.
Supply chain issues in the auto industry that reduced the supply of new cars led to dramatic increases in the price of Carvana’s product, used cars. Many of the problems have started to resolve in the new car market and as a result used car prices have recently started to drop. Rapidly rising interest rates have only compounded the problem, meaning Carvana had a harder time selling cars, the company said in its fourth-quarter earnings announcement.
Accustomed to sales growth, Carvana was simply not prepared for the market downturn it encountered, the company said.
The number of cars Carvana sold in the fourth quarter of last year fell 23% from a year earlier to about 87,000, while total sales fell 24%.
For the full year, Carvana sold 3% fewer vehicles, while sales grew 6% to $13.6 billion. Carvana has aggressively reduced its inventories, the company said, driving the number of vehicles in inventory down 27% in the fourth quarter.
“This past year has been a huge shift in priorities for the company. The world has changed very, very quickly for us,” CEO Ernie Garcia III said in an earnings call, “and we have shifted our priorities very, very quickly. has been a difficult transition, but I think there is no doubt it will lead to a more efficient business.”
The results of that efficiency, he said, would appear “in the not-too-distant future” when used car sales pick up again.
Company executives said they have been working to reduce their spending on car sales, particularly by reducing advertising spending. However, because the number of cars sold has fallen, the discounts have not fallen still visible in the profit per vehicle, they said. As the company works toward profitability, Chief Financial Officer Mark Jenkins said, the company had $3.9 billion in cash, available real estate and other liquid assets available to draw from.