Carvana CEO expects coronavirus stimulus checks to help vehicle sales

Carvana CEO and Chairman Ernie Garcia III expects coronavirus stimulus checks being distributed by the federal government to potentially assist the company as well as U.S. vehicle sales overall.

“I do think in general when people get big sums of money from the government, whether it’s tax season or now with this stimulus, that does generally drive some large-ticket purchases,” he told CNBC’s Jim Cramer during “Mad Money” on Wednesday. “I think there is a chance that will be a positive for us.”

The checks are worth $1,200 for individuals with adjusted gross income below $75,000 and $2,400 for couples earning below $150,000. They are part of the Trump administration’s $2.2 trillion stimulus bill passed to aid Americans suffering financially as a result of the coronavirus pandemic.

Carvana, an Arizona-based used car company, largely sells vehicles online and delivers them to the customer. It also operates 24 patented, automated car vending machines.

Garcia, a co-founder of the retailer who also serves as president, said COVID-19 rapidly affected automotive retailers, however, Carvana hasn’t experienced the declines as much as others that reported 50% to 85% during the second half of March.

“We’ve held up significantly better than that, but there’s no doubt this has had a big impact across the board, across our industry and other industries as well,” he said.

Used car sales have declined more than new car sales during the coronavirus pandemic, according to J.D. Power. Many automakers reported double-digit declines in new vehicle sales for March, led by massive drops during the second half of the month.

To assist during the pandemic, Carvana has implemented a touchless delivery system and is offering 90-day deferred payments. That’s in addition to delivery and a seven-day free trial of the vehicle.

Shares of Carvana closed Wednesday down 15.2% to $71.34. The stock remains up 10.8% during the past year despite a 22.5% decline in 2020. The company’s market cap is $11.8 billion.

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