Carvana sees sequential reduction in retail units sold in Q1 vs Q4

The company said: "On retail units, we currently expect a sequential reduction in retail units sold in Q1 2023 compared to Q4 2022, as we continue to normalize our inventory size, optimize marketing spend, and make progress on our profitability initiatives. Through the first seven weeks of Q1, we have averaged ~5,600 retail units sold per week. Historically, we have seen an increase in retail unit sold volume in March during tax refund season; however, unlike in past years, we have been decreasing, rather than increasing advertising, inventory, and staffing levels. As a result, we expect the increase in sales we have historically seen in tax season to be muted this year relative to past years. On GPU, we currently expect a sequential increase in Total GPU in Q1 2023 compared to Q4 2022. We expect Retail GPU to increase in Q1 due to multiple offsetting effects. First, we are quickly reducing our inventory size by purchasing fewer retail vehicles. Purchasing fewer retail vehicles means fewer low age vehicles are added to the website, which other things being equal, increases the average age of our inventory and retail units sold and reduces Retail GPU. At the same time, we expect our lower inventory size to lead to a retail inventory allowance adjustment benefit in Q1, leading total Q1 Retail GPU to be higher than Q4. We also expect a sequential increase in Other GPU in Q1 following the shift in the timing of loan sales from December 2022 to January 2023 discussed earlier in this letter."