Online car retailer Carvana is expanding the company’s revolving credit facility on the heels of climbing gross profit per unit and strong consumer demand during the first quarter of 2021.
Under an agreement entered into April 30, an unspecified lender will provide Carvana with a $500 million revolving credit facility to “fund certain automotive finance receivables” the retailer originates, according to the Q1 earnings letter to shareholders. The facility is set to expire Oct. 30, 2022. Carvana has revolving credit facilities with multiple lenders, including a $3 billion line of credit with Ally Financial. The retailer did not respond to requests for additional information by press time.
In the first quarter, Carvana’s finance and ancillary product gross profit clocked in at $2,218, up from $2,006 last quarter, a 114% increase year over year. The increase is largely due to Carvana’s first two public securitizations totaling $881 million in March. Carvana did not break out finance GPU specifically.
First-quarter originations totaled $1.4 billion, an increase of 82% YoY.
Net finance receivables held for sale in the first quarter totaled $384 million, an increase of 39.6% from last quarter, with Carvana unloading most of its originations off its balance sheet.
Carvana sold 92,457 cars in the first quarter, an increase of 76% YoY, as the retailer purchased about the same number of cars from customers as it sold to them during the quarter, Mark Jenkins, chief financial officer, said on the recent earnings call.
“In April, we set a new company record for cars bought from customers, both on an absolute basis and relative to retail units sold,” Jenkins said, noting that Carvana will no longer be providing detailed numbers on how many cars are purchased from customers each quarter. “Our success over the last two years has made the strength of our offering of buying cars from customers clear.”
The Tempe, Ariz.-based retailer continues to prioritize inventory amid strong consumer demand. As of the first quarter, Carvana had 9,300 cars immediately available for purchase, a 27% decrease from the fourth quarter of 2020, but a 97% jump from July 2020 when inventory fell to its lowest level, with only 4,700 cars immediately available.
Carvana recently expanded into 16 new markets, including the company’s first five in the Pacific Northwest, according to the letter to shareholders. Carvana also recently opened its 12th inspection and reconditioning center, this one located near Birmingham, Ala., and its 28th vending machine, this one in Las Vegas.
Shares of Carvana [NYSE: CVNA] were trading at $224.99 as of 3:15 p.m. ET today, down 5.16% as of market open. Carvana has a market capitalization of $38.8 billion.