San Francisco,  Carvana, a US-based online used car retailer, has laid off about 1,500 employees, or 8 per cent of its workforce, as it attempts to cut costs amid weakening demand for used cars on the back of rising interest rates.

According to CNBC, company CEO Ernie Garcia stated in an internal memo that higher financing costs were causing economic headwinds.

"Today is a difficult day. The world around us has continued to get tougher and to do what is best for the business, we have to make some painful choices to adapt," Garcia was quoted as saying.

The layoffs add to an increasing number of tech-related job cuts in the face of rising interest rates, persistent inflation, and economic downturn fears.

Carvana has also experienced rapid growth, but has made some mistakes during the coronavirus pandemic in order to capitalise on an unprecedentedly strong used vehicle market, according to the report.

The layoffs primarily affect employees in Carvana's corporate and technology departments, as well as some operational positions where the company is "eliminating roles, locations, or shifts to match our size with the current environment", the report added.

Employees who were affected will receive separation and severance pay, extended healthcare coverage for three months, and other benefits.

"To those impacted, I am sorry. As you all know, we made a similar decision to this one in May. It is fair to ask why this is happening again, and yet I am not sure I can answer it as clearly as you deserve," Garcia added.