The used car market could get a boost from the rising costs of goods and services, Carvana Founder and CEO Ernie Garcia said Wednesday (April 29).
During the used car eCommerce platform’s first quarter earnings call, an analyst asked Garcia if more consumers might trade down to used cars because of new car prices, tariffs and gas prices.
Garcia answered that people must be impacted by higher car prices and that people need cars to live their lives.
“So, I think you generally see aggregate transactions that are relatively stable,” Garcia said. “I think there is room, though. All the things you pointed to are things that are probably directional positives for the overall market size over time.”
Garcia added that while things that happen in the market affect Carvana, the things the company does itself are much more powerful.
He said this during an earnings call in which he reported that for Carvana, the first quarter was “another quarter full of records.”
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According to a Wednesday earnings release, Carvana set new quarterly records by selling 187,393 retail units and earning total revenue of $6.432 billion. Those figures represented year-over-year increases of 40% and 52%, respectively.
Garcia said in the release that Carvana’s vertically integrated model is built to make the process of trading used cars “easier, faster, more efficient and more fun.”
In a letter to shareholders released Wednesday, Garcia wrote that the company achieves that goal in part by maximizing the use of technology.
The company and its platform can enable customers to schedule delivery of a vehicle two minutes after clicking “get started,” and have a vehicle delivered to their driveway less than two hours after clicking “get started,” he wrote.
Garcia said that these examples are outliers but illustrate the capabilities of the Carvana system.
One of the changes Carvana made in recent months is the addition of an artificial intelligence-powered application that helps managers allocate labor more efficiently, according to the letter.
“So far in Q2, we are beginning to see the impact of these efforts, with labor hours per unit for vehicles produced over the last few weeks approaching levels just shy of our all-time best,” Garcia wrote in the letter.
