Carvana and ACC on Shaky Ground as American Used Car Retailers Face Pain as Rates Increase
Posted on 02/26/2023
The U.S. used car market is definitely cooling down. American Car Center, LLC (ACC) is a U.S. subprime auto lender. The company closed down after pulling its US$ 222 million bond sale from the market. The used car retailer is ceasing all operations, closing its headquarters in Memphis, Tennessee, and that all employees are being terminated. American Car Center has more than 40 dealerships across 10 states. American Car Center is owned by York Capital Management LLC. On May 2, 2016, York Capital Management completed the deal to buy American Car Center, LLC and American Financial, Inc. Stephens Inc. served as exclusive financial advisor to American Car Center on that 2016 deal.
Online used-car seller Carvana is known for its tall glass “car vending machines.” Carvana is the second largest used-car retailer in the U.S. CarMax is the largest U.S. used auto retailer. In 2022, debt-laden Carvana sold fewer cars than it had the year before. Overall, Carvana’s losses grew to US$ 806 million in its latest fiscal quarter. This is comparing a loss of US$ 89 million in the last quarter of 2021. For the full year of 2022, Carvana lost US$ 1.6 billion compared to a loss of US$ 135 million in 2021. Carvana had acquired cars at a higher rate during the core part of the COVID-19 pandemic. This caused Carvana to have a large inventory problem as the retailer bought automobiles at inflated rates.
