Carvana, the used car dealer that was founded a decade ago meteoric growth spring encountered a good deal of problemssaid Tuesday it would lay off 2,500 employees, with unpaid executives for the remainder of 2022.
IN a filing with the Securities and Exchange Commissioncalled the Carvana move an initiative of “the right size”.
May 10, 2022, Carvana Co. announced. (“Carvana”) a reduction in the workforce of approx. 2,500 employees, primarily in operational groups, in connection with their previously announced plans to better adapt staffing and expense levels with sales volumes.
All affected team members will have the opportunity to receive four weeks’ salary plus an extra week for each year they have been with Carvana. Affected team members will also have the opportunity to receive extended health coverage, pay the corresponding early earnings of certain previously awarded equity rewards, recruitment and resume support, and continued participation in certain other company programs. The management team waives pay for the rest of the year to contribute to severance pay for retiring team members.
We believe that these decisions, although extremely difficult, will result in Carvana restoring a better balance between sales volume and staffing levels and making it easier for Carvana to return to effective growth on its mission to change the way people buy and sell cars. on.
Separately on Tuesday, a Redditor posted what they said was an email sent to Carvana’s employees, saying that various industrial pressures – supply chain problems, higher interest rates and inflation, and slower car sales due to “high car prices all the time” – meant that Carvana’s growth spring slower than expected. The email, which we have not confirmed but seems legitimate, also states that the layoffs make up about 12 percent of Carvana’s employees, and offered the same information about severance pay for the affected employees in the SEC archives.
Layoffs were probably inevitable given that Carvana reported its first ever sales decline in April this year—A year when used car prices and demand are still at outstanding heights. It is worth noting that, at the same time as the revelations of these mass redundancies and the executive pay cuts, Carvana announced this morning that they will pay $ 2.2 billion to buy car wholesaler Adesa US., which operates 56 auction sites across the country.