Carvana expanding after laying off 2,500 employees earlier in the year; here's what you need to know

TEMPE, Ariz. - Tempe-based used car retailer Carvana is expanding once again, months after the company, according to an e-mail we obtained, laid off 12% of its workforce, or 2,500 employees.

Here's what you should know about the massive layoff, as well as the expansion.

What's Carvana?

Carvana, which quickly became a billion-dollar company since it was founded a decade ago, is known nationwide for its multi-story car vending machines. The company operates more than 30 used-car vending machines across the country.

Why are they expanding again?

On Aug. 24, company officials announced it is expanding, as well as opening its second car vending machine in the Phoenix area.

The new machine will reportedly be located in Glendale, and will be the 33rd such machine in the U.S.

When did the company announce the layoffs?

The layoffs were announced in May 2022.

Why did they lay off people?

In the e-mail, Garcia cited "recent macroeconomic factors" that pushed the automotive retail industry into a recession as a factor in the layoffs:

"Recent macroeconomic factors have pushed automotive retail into recession. While Carvana is still growing, our growth is slower than what we originally prepared for in 2022, and we made the difficult decision to reduce the size of certain operations teams to better align with the current needs of the business.

Saying goodbye to any team member is not a decision we take lightly and we aim to be transparent, thoughtful and supportive throughout this process, including providing meaningful assistance, resources and support to impacted team members. We believe these decisions, while extremely difficult, will result in Carvana restoring a better balance to our operations and facilitate the company returning to efficient growth on its mission to change the way people buy and sell cars."

The company saw its multi-billion-dollar profits nosedive in the months prior to the layoff, and the company's stock prices plunged to $36 a share.

"We had been gifted 23 shares of Carvana stock. It was over $3,000 in the time I was gifted it," said Sergio Silva, one of the laid-off Carvana employees. "It’s only $900 today."

Who was affected? What did they get?

According to the e-mail, the nationwide layoffs mostly affected those in operational positions within Carvana.

"I wish the burden were shared more evenly across the company, but our operations teams have grown the most over the last several months and are therefore furthest out of balance with the sales we are seeing," Carvana chairman and CEO Ernie Garcia III wrote in the email on May 10.

The layoffs came over a year after the company held a number of hiring events for positions in the Phoenix area.

Those being laid off reportedly received four weeks of pay, plus one week for every year they have been employed with Carvana.

The severance package also provided extended healthcare for three months.

Garcia wrote in the email that the Carvana executive team would forego its salaries for the remainder of the year to help contribute to the severance pay for the laid-off employees.

How were the workers laid off?

According to Silva, workers were laid off in a Zoom meeting.

"The Zoom meeting itself, I thought was handled really poorly," said Silva. "No questions, and actually I feel like it was a pre-recorded video."

Silva said the layoff experience was disappointing and demeaning, when compared to the way employees were treated when they were hired.

"I came to Carvana because I thought they were different," said Silva. "I really thought they were about the people, and then you realize they really don’t care. It comes down to, ‘oh, you are corporate in different clothing.'"

A Carvana Vending Machine location in Novi, Michigan, U.S., on Wednesday, Nov. 3, 2021. (Credit: Emily Elconin/Bloomberg via Getty Images)