Used car retailer Carvana lays off 8% of its workforce as interest rates rise
Carvana, a US-based online used-car retailer, has laid off around 1,500 employees, or 8% of its workforce, as it tries to cut costs amid weakening demand for used cars due to rising interest rates.
According to CNBC, company CEO Ernie Garcia said in an internal memo that rising funding costs are causing economic headwinds.
“Today is a tough day. The world around us has continued to harden and to do what’s best for the business, we have to make painful choices to adapt,” Garcia said.
The layoffs come on top of a growing number of tech-related job cuts in the face of rising interest rates, lingering inflation and fears of an economic downturn.
Carvana has also grown rapidly, but made some mistakes during the coronavirus pandemic to capitalize on a used-vehicle market of unprecedented strength, according to the report.
The layoffs primarily affect employees in Carvana’s business and technology departments, as well as certain operational positions where the company is “eliminating roles, locations or changes to match our size with the current environment”, adds the report.
Affected employees will receive severance and severance pay, extended medical coverage for three months and other benefits.
“To those affected, I’m sorry. As you all know, we made a decision similar to this in May. It’s fair to wonder why this is happening again, and yet I’m not sure I can answer it. as clearly as you deserve,” added Garcia.
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