(Bloomberg) -- Carvana Co. expects used car sales to benefit from early signs of a potential glut in new vehicles, Chief Executive Officer Ernest Garcia III said Tuesday. 

“There will likely be much more car production and that will probably bode well” for the online used-car retailer, Garcia told reporters at an Automotive Press Association event outside Detroit.

Garcia noted that major automakers are already boosting incentives in the US and offloading more new cars to fleet buyers like rental companies to relieve pressure from their dealers’ growing inventories.

Average industry new car inventories in the US at the end of April climbed to 50 days’ worth of supply, two days more than in March and 17 days higher than a year ago, according to Deutsche Bank.

The used car retailer has seen its fortunes rebound on stronger sales and after restructuring its large debt load. Earlier this month, it reported net income of $49 million, including a one-time gain, a reversal of analyst expectations for a $116 million loss. 

Carvana grew vehicles sales in the first three months of 2024 for the first time in six quarters, pushing revenue to $3.1 billion. But the Tempe, Arizona-based online retailer has more than $6 billion in debt, and is contending with rising interest payments on its restructured loans.

Garcia reiterated the company’s second quarter guidance for sequential growth in earnings before interest, taxes, depreciation and amortization. He also said Carvana is moving toward a time when it expects to post net profits, which include interest payments, on a sustainable basis.

Shares of Carvana rose 3.1% to $120.51 as of 2:26 p.m. in New York. The stock has more than doubled so far this year. 

©2024 Bloomberg L.P.