Carvana Fires 2,500 Workers, Some Via Zoom

Carvana, blaming a "recession" in auto sales, said it is cutting 2,500 jobs and informed some workers of the layoffs via Zoom. The online car retailer also sent an email to workers from CEO Ernie Garcia III that said most of the cuts would be in the company's operations division. 

"I am sorry," Garcia said in the email. 

Carvana shares plunged $6.66, or 18%, to $30 on Wednesday. The company's stock has tumbled 87% since the start of the year amid its slowing growth and a spike in vehicle prices. 

Garcia, whose billionaire father is a major shareholder in Carvana, said the workers losing their jobs will receive four weeks of pay as well as one week for every year of service with the company. In a regulatory filing, the Phoenix-based company also said that its executive team is go with salaries for the rest of the year to help fund severance pay for the workers.

The reaction on social media, including among people who said they were cut in the round of layoffs, was negative. Many criticized Carvana for relying on Zoom and email to inform workers that they were losing their jobs. 

"Scary experience"

Two workers who lost their jobs in the layoffs told CBS MoneyWatch that they have heard nothing directly from managers at Carvana. Instead, they were informed first via Garcia's email on Tuesday morning, and then a short time later lost access to the company's corporate network, including email and Slack. They received texts telling them to attend a Zoom meeting later that morning, where a woman informed them that their jobs had been cut. 

"It was a very scary experience," said Jay Romero, 30, who had worked for Carvana for more than two years in Phoenix. "I had no support from anybody — no management, no team leads."

He added, "One of Carvana's slogans is 'Treat customers as you would treat your own mom,' and we didn't get treated that way as employees."

Another worker who was laid off said employees were told to keep working even after getting the email notifying them of the job cuts. Leigh Frantz, 26, of North Liberty, Iowa, also said she had no direct contact from managers about losing her job, and, like Romero, only learned she had been let go after getting booted off email and the Zoom call.

"They were doing mass layoffs in these Zoom calls," Frantz told CBS MoneyWatch, saying that a woman read from a prewritten script to inform them that they had lost their jobs. Workers weren't allowed to ask questions on the Zoom call. "It was so disrespectful."

In an email to CBS MoneyWatch, Carvana said it had "as many conversations as we could in person, and where in-person was not possible, we spoke to our team members over Zoom." The spokesperson added, "Not all of the conversations were through Zoom."

Shades of Better.com?

The incident recalls another incident late last year when real estate company Better.com asked 900 employees to attend a Zoom call before the holidays. But rather than offering an end-of-year message to workers, CEO Vishal Garg informed attendees they were being fired. Garg's mass dismissal sparked outrage, with people calling the mass video layoff "crass" and criticizing its timing around the holidays.

Carvana, which sells online and delivers used vehicles to buyers, said the layoffs represent 12% of its workforce. 

"Recent macroeconomic factors have pushed automotive retail into recession," the company said in a statement sent to CBS MoneyWatch.

"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," the company added. 

The layoffs come just a few weeks after Carvana posted a $506 million loss in the first quarter, six times larger than the same period a year ago. The company also recently acquired Adesa U.S.'s used vehicle auction business for $2.2 billion.

—With reporting from the Associated Press.

First published on May 11, 2022 / 3:05 PM

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