Carvana investors are fleeing as speculation swirls over the used car retailer's survival. Shares fell more than 30% during Wednesday's trading session.
"Interest rates have risen rapidly with the two-year treasury a good benchmark for automotive loans rising 3.9% over the last year and 2.6% since 2019," he said. "In addition, credit spreads have risen about 1% in the last year" said Garcia.
"To put this in perspective for a customer utilizing financing, the moves into your current yields plus credit spreads of last year are equivalent in their impacts on the customer's monthly payment of about a $3,000 price increase. As a result, for customers using financing, cars ended the quarter at their most unaffordable point ever, despite the fact that retail prices have dropped roughly 10% this year.
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