Hot Market for Used Cars Pushed Carvana to Record Profit -- WSJ

By Patrick George

As more Americans bristle at the idea of paying $50,000 on average for a new car, Carvana is capitalizing on the growing demand for used cars.

The online used-car retailer Wednesday reported record sales and profits in the second quarter. Carvana said it sold about 197,000 vehicles -- up nearly 40% year-over-year -- with a profit of $310 million, up from $183 million a year earlier. Revenue also rose 52% to $7.38 billion.

Investors, meanwhile, weren't impressed. Carvana's stock price fell about 15% during after-hours trading, before moderating back to about an 8% drop, as its updated full-year guidance failed to meet analyst estimates. The company projected earnings of $2.7 billion to $3 billion this year, while some forecasts expected more than $3 billion.

On a call with investors Wednesday evening, Carvana's Chief Financial Officer Mark Jenkins said that the company's first-half guidance is in line with what it has announced in previous years.

"The goal there is to let people know some guardrails around what we're expecting in the second half," Jenkins said. Executives said the company has seen growth above 50% in the Midwest and the Northeast. "Overall, I think we're feeling very good about the trajectory," Jenkins said.

The results marked 10 consecutive quarters of growth at Carvana, executives said, and the approximate doubling of retail sales in the past two years. In a letter to shareholders, Chairman and Chief Executive Ernie Garcia III said the company still has a significant runway to grow, as it now carries about 2% of the used-car market.

"The experience we deliver our customers is simple, fun, and fair, building our brand and driving word of mouth," Garcia said.

Carvana's business model often appeals to people burned out by the traditional dealership experience or those who have been turned off to new cars entirely. The company sells cars through its website and smartphone app with no-haggle fixed prices, and offers local delivery.

About one million annual buyers have vanished from the new-car market, often because of record-high prices that have characterized the U.S. auto industry since the Covid pandemic. Instead, those buyers are choosing to go used or to keep and maintain their vehicles for longer.

Meanwhile, Carvana also has its sights set on the new-car market. The company has recently acquired several dealerships from the automaker Stellantis, the parent company of Jeep and Ram, and has in some cases seen booming sales in return. As The Wall Street Journal reported earlier this year, this move has rattled many new-car dealers, whose sales model is tightly regulated and enshrined in strict state franchise laws.

Carvana does not break out new-car sales numbers in its financial reporting.

While the company has been circumspect about any potential plans to expand its new-car sales presence, it recently unveiled a new store concept. There, buyers can shop for Stellantis vehicles using their smartphones and a giant cube with four 10-foot by 10-foot screens.

On Wednesday's call with investors, Garcia demurred when asked about Carvana's plans for future new-car sales, saying "it's still very early days."

"New cars are profitable for us today, but beyond that, there's not a ton of detail that we're ready to provide," he said.

Write to Patrick George at patrick.george@wsj.com

(END) Dow Jones Newswires

July 29, 2026 19:16 ET (23:16 GMT)