Economy

Without Warning, Carvana Lays Off 2,500 in Phoenix

Tempe-based Carvana Co. announced it would slash its workforce by 12 percent on Tuesday morning, laying off 2,500 employees.
Tempe-based Carvana Co. announced it would slash its workforce by 12 percent on Tuesday morning, laying off 2,500 employees. Carvana

Tempe-based online used car retailer Carvana Co., the fastest-growing American used car dealer known for its towering, multi-story glass car vending machines, abruptly terminated thousands of its employees in metro Phoenix on Tuesday morning.


A company spokesperson confirmed the mass layoffs with Phoenix New Times.


The unanticipated decision to let 2,500 employees go is already rocking the workplace.


Davis Brown, an underwriter for Carvana in Tempe, clocked into work Tuesday morning ready for another day of crunching financial numbers for the automotive giant — just as he has done every day since October.


Instead, Brown was greeted with a company-wide email containing unexpected news. His employer was terminating 12 percent of the company’s more than 20,000 workers.


“Carvana just announced massive layoffs, but no one knows who yet,” Brown said. “We're being expected to work as if nothing is going on and told not to talk about it in Slack.”


Brown claims his coworkers were threatened and censored on Slack, a workplace messaging application, after voicing opposition to the large-scale layoffs.


As the hectic morning unfolded, Brown learned he was spared from sudden unemployment.


“I’m pissed for everyone who needs their jobs,” he said.


That was the outcome for thousands of his colleagues.


“It was horrible,” Bridget Conrad, a trainer who was laid off on Tuesday, told New Times. “I am just numb right now. It was thrown on us with no notice.”


Conrad, who has worked at Carvana’s Tempe headquarters since 2020, didn’t hear chatter about the mass layoffs until Monday night, when she was told Tuesday would be a work-from-home day for her. She helped train some of the people who were laid off.


She planned to work her entire career and retire with Carvana.


Her employer had other plans.


“Carvana has made the incredibly difficult decision to separate from certain teammates primarily in our operational groups in connection with recent macroeconomic factors that are significantly impacting automotive retail and our previously announced plans to better align staffing and expense levels with current sales volumes,” Carvana spokesperson Veronica Cardenas said in an email to New Times.


Brown and others wonder if the action has anything to do with other big news from Carvana on Tuesday morning.


Just hours before officially downsizing its staff, Carvana announced its intention to pay $2.2 billion for Adesa U.S., the wholesale vehicle auction unit of Carmel, Indiana-based KAR Auction Services Inc.


“It’s profits over people,” Conrad said.


A company spokesperson did not confirm any connection between the two events.


“We aim to carry out this difficult decision in a transparent and thoughtful manner while providing meaningful assistance, resources, and support to impacted team members,” Cardenas said. “We believe these decisions, while extremely difficult, will result in Carvana restoring a better balance between its sales volumes and staffing levels and facilitate the company returning to efficient growth on its mission to change the way people buy and sell cars.”


Affected workers, believing their employer was overzealous in recruiting a small army of new personnel last year, claim the company is simply trying to cover for its mistake.


Brown was brought on board six months ago as part of a large hiring initiative that saw more than 100 new employees start work every week. Hiring just halted in April.


“They massively overhired,” Brown told New Times. “Calling it ‘bullshit’ in Slack is being met with threats of being sent home for the day and any threads about it are being instantly deleted.”


Brown first leaked the company-wide email on the social discussion website Reddit.


He plans to quit next week.


“They said they were preparing for tax season and to be ready for mandatory overtime,” Brown said. “Come tax season, there was no overtime and we were being offered unlimited unpaid time off.”


Conrad even worked reduced hours — just 35 hours per week — during what was supposedly the busiest time of the year early this spring.


Carvana, which generated nearly $13 billion in gross revenues last year, according to filings in February with the U.S. Securities and Exchange Commission, promised each affected employee four weeks of pay plus one week for every year of service with the company.


Leadership promised that the “door will be open for rehire once we start growing again.”


The online car seller said acquiring Adesa will give it "significant flexibility" to grow in the future.


“Our team is bigger than we need and we can’t be certain growth will rebound quickly enough to bring us all back to balance,” Carvana co-founder Ernie Garcia wrote in his Tuesday morning email to the company, which was leaked to New Times. “I want to tell you I am sorry. I know that doesn’t go very far to change what this means for you and your family. Regardless, it is true and it needs to be said.”


Spurned workers like Conrad are left hoping Carvana will be true to its word and consider rehiring ex-employees after anticipated internal growth.


In the meantime, she’s checking the classifieds.


“Now, I’m scrambling,” Conrad said. “I don’t know where to go or what to do.”


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Elias Weiss is a staff writer at the Phoenix New Times. A native of Charlotte, North Carolina, he reported first for the Northwest Arkansas Democrat-Gazette and was editor of the Chatham Star-Tribune in Southern Virginia, where he covered politics and law. In 2020, the Virginia Press Association awarded him first place in the categories of Government Writing and Breaking News Writing for non-daily newspapers statewide.
Contact: Elias Weiss