Carvana CEO Ernie Garcia told CNBC’s Jim Cramer in a Monday interview that it’s hard to say when used car prices will come down, even though the company is doing what it can to cut costs and make vehicles affordable for customers.
“When the pandemic hit and supply chains got hit, that was really tough on affordability, and it’s made it a lot harder for a lot of customers to buy cars,” Garcia said. “So we would love for car prices to come down, we expect them to over time — I think the timing is always hard to predict.”
Garcia said “there’s no question” that used cars are too expensive. In 2019, the average car Carvana sold was three years old and cost $19,500, he said. Now, the company’s average car is closer 5.7 years old and costs about $25,000.
In the past year and a half, the used car retailer has cut $1.2 billion of SG&A, or selling, general and administrative expenses, out of the business, as well as $250 million of cost of goods sold, according to Garcia.
“If rates were to come down that would be great too, but obviously that’s certainly not something that’s in our control,” he said. “In the meantime, we’re just going to drive down costs, and we’re going to keep delivering to customers the best experience we can. I think the rest will take care of itself.”
After a tough couple of years, Carvana has managed to make a comeback, in part thanks to a billion dollar debt restructuring deal. On Monday, the company’s shares were up 617.71% year-to-date, according to FactSet.