Carvana Q2 sales surge 38% as added capacity outpaces industry decline

Carvana (CVNA) reported a 38% increase in retail units sold during the second quarter of fiscal 2026, a performance that management attributed to expanded production capacity at ADESA sites and existing inspection centers. This growth occurred while the broader used car industry declined by approximately 4% over the same period. The company’s physical infrastructure investments are beginning to translate into higher volumes, although the stock has underperformed the broader market over the last six months.

Management stated on the fiscal Q2 2026 earnings call that inventory grew by 57% in the two regions where Carvana added the most retail production capacity. Sales in those specific regions increased by 54% during the quarter. Despite this acceleration, company leaders noted that current inventory levels remain lower than desired, a constraint they said continues to limit overall sales volume and economic performance. Management expressed expectations that these constraints would be relieved in the coming period.

While unit sales rose, profitability metrics showed mixed results compared to the prior year. When asked about adjusted EBITDA per car, management indicated the figure was down approximately $300 from a year earlier, though it had recovered by about $300 from the previous quarter. A specific component of gross profit per car, labeled as 'other', decreased by $192. Management explained this decline was driven primarily by the decision to offer customers lower interest rates and by rising benchmark rates. On the cost side, customer care expenses fell by another 10% from a year earlier, following consecutive annual drops of 40%, 30%, and 20% in the three preceding years.

Revenue growth outpaced unit sales during the quarter, with total revenue increasing by 52%. Management clarified that part of this discrepancy resulted from booking the full price of vehicles acquired from a large retail marketplace partner. The company expects revenue growth to align more closely with retail unit growth starting in the third quarter of fiscal 2026. Currently, Carvana holds a position representing just 2% of the used car market, according to management’s figures.

Investors are evaluating these operational gains against a premium valuation. Carvana stock trades at 26.9 times trailing earnings, compared to a 22.9 multiple for the S&P 500. The shares have experienced significant volatility previously, dropping 94% during the 2022 inflation shock while the S&P 500 ETF fell 24%. The stock has fallen 27% in the last six months, a period during which the S&P 500 gained 8.8%. The next key milestone for monitoring profit trends is Carvana’s next earnings report, expected on or around October 28, 2026.