Last week, the online car dealer reported weaker results than expected. Sales came in at about $3.4 billion, below the $3.7 billion Wall Street was looking for. Vehicles sold totaled 102,570, down from 117,564 in the second quarter of 2022 and off 8% compared with the third quarter of 2021.
Shares plunged 39% following earnings, bringing the loss so far this year to about 96%.
Management said demand for cars has cooled as interest rates rise, increasing the monthly cost of any vehicle purchased with financing. Both the weaker demand and higher borrowing costs are weighing on prices for used vehicles, which is also hurting
កាវ៉ាណា
and other auto dealers.
“Bad timing for a headwind,” wrote Benchmark analyst វួដ Mike following Carvana’s quarter. He rates the shares at Hold and doesn’t have a target for the stock price.
Ward points out that U.S. used-vehicle sales dropped more than 13% in the third quarter. “A sharp decline in market prices has created a headwind for used vehicle retailers, and the trend is expected to continue into 2023,” he wrote.
When prices fall quickly, consumers pull back, expecting a better deal tomorrow, which tends to put still more pressure on prices as inventories pile up. Other industries such as housing, which also rely on financing to facilitate purchases, are facing the same issue.
In the world of automobiles, it isn’t only a problem for used-car dealers. Rental car companies such as
ហ័រសសកល
(HTZ) and auto lenders such as
សម្ព័ន្ធហិរញ្ញវត្ថុ
(ALLY) rely on estimates of used car prices in the future to manage things such as capital spending and pricing. Volatility in used-car prices can wreak havoc on their financial results.
Prices for new and used cars are also linked. If one gets too far out of whack with the other, then buyers shift their attention to the better value until things adjust.
The good news for auto makers such as
ក្រុមហ៊ុន Ford Motor
(ច) និង
ក្រុមហ៊ុន General Motors
(GM) is that new-car sales volumes shouldn’t be affected all that much. Volumes are already low because production has been constrained by parts shortages. U.S. new-car sales should come in around 13 million units in 2022, which is roughly three million below the levels of previous years.
New cars aren’t piling up, either. Those parts shortages have left U.S. inventories of new cars at about half of normal levels.
Auto makers still have to worry about the effects of falling prices, adding to the long list of challenges for investors in the industry to consider.
ក្រុមហ៊ុន Ford
and GM shares are down 35% and 33% so far this year, worse than the roughly 21% and 11% respective declines of the
អេស & ភី ៥០០
និង
Dow Jones ឧស្សាហកម្មមធ្យម.
Both shares trade for less than seven times the per-share earnings expected for 2023, reflecting some of the nervousness investors feel about the car business and the broader economy.
សរសេរទៅអាល់រ៉ូលនៅ [អ៊ីមែលការពារ]