Carvana originations soar 51%

Carvana ’s second-quarter earnings showed significant gains in originations and sales. Originations totaled $3.1 billion, up 51.1% year over year and 16% quarter over quarter , according to an Auto Finance News analysis of the retailer’s July 30 Q2 letter to shareholders. "We believe this growth rate speaks clearly to the desirability of our offering and our team's ongoing execution,” co-founder, President and Chief Executive Ernest Garcia said on the company’s July 30 earnings call. The company previously announced plans to prioritize growth over margin for the next five to 10 years. Finance receivables held for sale in Q2 sat at $767 million, up 1.2% YoY and 4.1% QoQ, according to the letter. Demand, growth continues The company continues to benefit from opening additional reconditioning sites, Garcia said. “We are excited about the long runway and incredible potential we have,” he said, noting that 12 sites have been integrated with ADESA , a vehicle auction company Carvana acquired in 2022. “We grew inventory available for our customers by 50%” in Q2, Garcia said. Carvana is estimated to hold 1.5% of the country’s used-car market and about 1% of the overall car market, he said. Sales soar 41% Carvana’s Q2 retail sales rose 41.3% YoY and 7% QoQ to 143,280 units, with gross profit per unit (GPU) at $3,636, up 6.3% YoY and 13.5% QoQ, according to the letter. Other GPU, which includes finance and insurance, increased 4.3% YoY but dipped 1.2% QoQ to $2,869. In Q1, Carvana announced a goal of selling 3 million retail units annually over the next five to 10 years. [caption id="attachment_58353733" align="aligncenter" width="393"] (Courtesy/Carvana)[/caption] Revenue rises 42% Total revenue topped $4.8 billion, up 41.9% YoY and 14.4% QoQ, according to the shareholder letter. “Consistent with past quarters, our growth in the second quarter was driven by our three key long-term drivers of growth,” Chief Financial Officer Mark Jenkins said on the call. Those drivers are: Improving the customer offering; Increasing awareness, understanding and trust of the brand; and Increasing inventory selection and other benefits of scale. Liquidity strengthens Carvana’s total liquidity jumped 45.7% YoY and 2.1% QoQ to $6 billion, according to the letter. Aiding liquidity was the company’s $4 billion forward-flow agreement with Ally Financial , which was extended in January. Additionally, the company announced two auto asset-backed securitizations (ABS) this year. In March, Carvana came to market with a $625.3 million prime auto ABS deal, which followed a $300 million nonprime ABS transaction in February . In 2024, the company issued seven prime and nonprime deals totaling about $4 billion, according to Finsight . “We've also been expanding the buyer base more generally than just the ABS market,” Garcia said on the earnings call. “We believe [our receivables are] highly desirable to a lot of investors. ... There's room to expand the total buyer base for auto loans, and that could bode well.” Tariff, demand impact Consumer demand during the second quarter was in line with seasonal trends and buying behaviors ahead of tariff-induced price increases, Garcia said. “There was a little bit of pull forward and then maybe a little slowness immediately thereafter,” he said. Garcia expects “other dynamics and catalysts” will contribute to minor changes on a quarterly basis but nothing “super material.” “The most important thing that we can do is try to keep the machine moving forward effectively and build tools that enable us to absorb whatever bumps and make whatever changes we need to and if we see them,” he said. Shares of Carvana [NYSE: CVNA] climbed about 17% in aftermarket trading opening at $390.24 and were up about 15% as of 3:35 p.m. ET today to $385.28 as investors rallied on the heels of an uptick in originations, higher retail sales and increased revenue. Shares climbed as much as 20% in the trading day. Carvana has a market cap of $82.6 billion. Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 15-17 at the Bellagio Las Vegas. Learn more about the 2025 event and take advantage of the Aug. 29 early-bird registration here .

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