(Bloomberg) -- Carvana Co. said it will eliminate about 1,500 jobs, adding to the growing list of layoffs across corporate America as the online vehicle dealer grapples with a slowdown in the used-car market.
The cuts amount to about 8% of the company’s workforce, a spokesperson confirmed Friday.
Chief Executive Officer Ernest Garcia told staff that the layoffs were part of a broader effort to reduce costs, according to a person familiar with the matter who asked not to be identified. The cuts, along with moves to eliminate some locations and end certain shifts, are due to the challenging economic environment, the person said.
The job reductions will impact corporate, operations and technology roles, the person said. Affected employees will receive separation and severance pay through at least Jan. 1, along with three months of health-care coverage. They will also receive unvested equity awards through cash payments, according to the person.
The move marks the latest setback for Carvana, which is struggling with cash outflows and a tumbling stock price. The Tempe, Arizona-based company, which operates an online platform selling second-hand cars, benefited last year when supply challenges in new-car production caused a surge in demand for used vehicles. But a recent turn in the market, marked by falling used-vehicle prices and climbing interest rates, has hurt consumer demand.
Read more: Carvana Shares Plunge to Record Low as Used-Car Values Fade
The shares fell 6.1% to $7.81 as of 1:14 p.m. in New York. Carvana plunged 96% this year through Thursday’s close.
Prices of used vehicles slid in October for the fifth-straight month, according to the closely watched Manheim Used Vehicle Value Index. The shift has been a substantial drag on Carvana’s business and has worried Wall Street analysts, with Morgan Stanley’s Adam Jonas saying recently that the stock could be worth as little as $1.
Carvana this month cited the weakening used-car market and the broader economy when its quarterly earnings missed analysts’ estimates.
The company is the latest in a series of firms across industries to trim its ranks as conditions deteriorate, with FedEx Corp. saying earlier this week that it would furlough some workers. Many of the biggest job losses have been in the tech industry.
CNBC earlier reported the layoff plans.
(Updates with details of cost cuts in third paragraph)
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