Bloomberg Audio Studios, podcasts, radio news.
Sticking with earnings, Carvana out with its report overnight, and while the company had a strong fourth quarter and a rosy outlook, shares our down significantly. Today. Let's get some answers from CEO Ernie Garcia. Ernie, clearly, shares are reflecting some skepticism, and in particular, your gross profit per vehicle declined. What was behind that fall and do you expect it to rebound this year?
Sure?
Well, first of all, thanks for having us and to try to you'll briefly answer that question specifically, I think that their seasonality in retail GPU and we saw that a little bit this year. But I think there's a way bigger story going on that we're extremely proud of, and that's that we just had the most profitable year in automotive retail history, and we did it while growing at thirty three percent for the year and fifty percent in the quarter, and we did it with just one
percent market chare. So I think the big story here is we've still got a huge opportunity. We still have a ton of work to do. The team's done a great job. We're extremely excited day to day. The market is going to do what the market does, and our job is to just keep marching.
We're seeing some pullback in the retail sector and I'm curious if this bodes kind of any kind of weakness for Carvana. Where do you see used car prices going this year? Is there any vulnerability to you know, your consumers being more touchy around inflation?
Yeah, I think I think the way that we try to think about things is a little bigger picture than that. You know, again, I think the history of companies that are the most profitable in their industry and are growing the fastest is a pretty thin history. And when you look back on those companies, generally, the next you know, ten plus years, ten twenty years are are pretty great years.
I think we're focused on that timeline.
I think, you know, month to month, quarter to quarter, year to year, there's going to be inflation stories, there will be tariff stories, there will be ev stories.
But we don't talk about those specific.
Storylines about great companies when we look back in time, and I think our goals would be a great company, and so we're say, folks on our customers and just keep moving down the path. And we think that's going to take us to a great spot, as it has over the last couple of years on average.
A mean, I completely hear you on the market's going to do what the mark is going to do. It's off by sixteen percent though today, and that is a big four. I know that you've run up more than three hundred percent in the previous year. So credit where credit's due. But we need to get into some of those issues that the investor base is seeing. And I really want to ask about perhaps some of the gains that you saw in the sales of loans, perhaps people saying,
look that padded your ebit dar. Is that something that will continue to pad ebit dar? Is it something that's a one off.
I think it's something that's been a consistent contributor for the last couple of years, So I don't think we expect major changes there. I think since you brought up ibadad my jobs to make sure I frame all this as posively as possible. We increase our ebadad by four times a year over year, so I think that's pretty great.
Another is another line that points at a very good direction. So, like I said, I think we got to focus on our customers, give them a great experience that they love, give them a ton of selection, give them a great value you.
If we do that, the rest to take care of itself.
I think a job is to give things not just a positive ring, but a truthful ring. And I'm sure that that's what's you're trying to do. But let's talk about it to over effect. You're a positive guy, Oni, and we love it, But talk to us about some of the positive impacts or indeed negative impacts of taris. What does that mean for the secondhand market? What does it mean for autos more broadly, if it's gonna be tougher to get foreign cars in?
So I think that's incredibly complicated, and I think there's probably a lot of people that are better position to answer those questions than we are. So I unfortunately, I am going to give you a very unsatisfying answer that we will pay attention, will react to whatever happens. But again, I think what's going on inside of Carvona is you know,
we grew at thirty three percent last year. That's so large compared to anything that can happen macro, and so we think it's smarter for us to say, folks on our customers and on what we do, because it's just a bigger range than anything it's going to happen from a macro perspective.
Ernie, you said your guidance is based on the environment remaining stable, but there's a lot of external factors that also come into play. Which ones are you paying attention to? Specifically? Given to Caroline's point, tariffs do play a role, inflation does play a role. What will you be focused on to make sure that guidance stays on track?
Yeah, I think everything you just mentioned, I think that you know, we'll see.
I think there's a lot of uncertainty about what happens with harriff, there's a lot of uncertaint about what happens with inflation. I think if you ask two people, you get three answers. I think there's a lot of uncertain about what's going to happen with rates. We're going to pay attention, we're going to adapt to our environment, and we're going to keep moving forward.
So I think we watch all of that.
Of course, investors watch that very closely as well, But we think that our job is mostly to look at our business, to put together a bunch of projects that we're very confident we'll create value for our customers over a long period of time and to march through those projects one at a time, because on average, the macro environment is the average, and if you spend a ton of energy chasing your tail on that it's energy that could be put somewhere else that creates long term value.
So we try to stay long term focused.
Another parts of the car market, autonomous vehicles is kind of the next big thing. How are you thinking about how that might affect your business model? Are you looking to buy more of those types of cars wholes sale or how do you bring in that kind of business into the fold?
Sure, well, so I think related concepts evs.
You know, we put out a report today that that said that, you know, five point seven percent of our sales last year we're EVS. That compares to one point three percent for the used market in total, so we're you know, four times more likely to sell and eb to our customers.
We're believers in EVS.
We generally set up our system where it's a pull system, so we're buying the cars that our customers want. As autonomous vehicles start to become more available, we will certainly buy more of those and provide those to our customers, and in general, I think you know, we're fans of
any technology that pushes things forward. We think that as a one percent market shareholder, we will likely be beneficiaries of any change in the market, any shakeup, we're very well positioned to take advantage of because our customers love our offering and it makes things a little easier for us. So we'll be rooting for EV, we'll be rooting for autonomy, and we'll be doing our best to give our customers a great experience along the way.
It's great to have some time with you today. Thanks for coming on all the positivity to thank you. Appreciate it, Honey, Garcia