More than two years ago when the COVID-19 pandemic hit, investors piled into Carvana (CVNA -0.69%) stock as the company not only provided a simpler way to buy cars online but also already offered contactless delivery. Shares soared to tremendous highs before driving off a cliff over the past year after debt concerns caused investors to scatter.

If investors are to be lured back, and if Carvana is to drive shares higher once again, one key objective will be to increase its total gross profit per unit (GPU). Let's take a look at the used-car retailer's historic GPU and whether any speed bumps are on the road ahead.

Graphic showing GPU increase from $3,252 in 2020 to $4,537 in 2021.

Image source: Carvana's Q4 2021 presentation.

GPU spiked, even amid the pandemic

As you can see in the graphic above, Carvana has made consistent progress pushing its GPU higher, logging eight straight years of total GPU gains by the end of 2021. Furthermore, to investors' initial delight, its total GPU got a noticeable boost during the early quarters of the pandemic. Consider that when Carvana had its initial public offering (IPO) in 2017, its medium-term GPU target was $3,000, and so it was a big win to quickly achieve and soar beyond that level in the following years.

During that time, Carvana's shares skyrocketed along with its rising GPU (until recently). GPU is an incredibly important metric for investors to follow, simply because as the company improves operations, focuses on higher-priced used-car segments, or lowers costs, each vehicle it turns over adds more to its gross profit total.

The question remains: What has Carvana done for investors lately? The unfortunate answer, shown in the graphic below, will highlight a challenge the company encountered during the second quarter of 2022. Let's take a look and explain what investors need to understand about Carvana's GPU during Q2 and what to watch going forward.

Graphic showing year-over-year Q2 GPU decline from $5,120 to $3,368.

Image source: Carvana's Q2 2022 presentation.

Carvana hit a speed bump

The first thing to note about the graph above is that it shows second-quarter results rather than annual data. That's necessary to compare recent data with similar seasonal trends from its past. The used-car retailer's consistent history of rising GPU is still evident; however, equally evident is the plunge during Q2 of 2022.

Simply put, some external market conditions are out of Carvana's hands, including swings in used-vehicle prices, rising interest rates, inflation, and a global chip shortage that made vehicle production uncertain -- a ripple effect that is still being felt. These factors, combined with volatile demand during past few years, caused the company to prepare for a seasonal sales increase that didn't totally materialize. That led to elevated selling, general, and administrative (SG&A) expenses per unit, and thus a lower GPU.

The pressure is now on Carvana to lower SG&A by reducing its workforce to better match sales volume and to broadly improve operating efficiencies and savings. This, in combination with optimizing sales prices in high-demand vehicle segments, can all help drive GPU -- and perhaps its share price -- higher.

Despite the year-over-year decline in GPU, Carvana posted a $544 sequential improvement from the first quarter of 2022, and expects to continue growing GPU during the back half of the year. Management also expects to deliver lower SG&A costs per unit through the remainder of 2022, and sees its GPU topping $4,000 annually in 2023, as well as significant positive EBITDA.

Carvana has certainly hit a speed bump due to a combination of increasing debt and external economic factors -- and its share-price decline reflects those challenges. However, if management continues to sequentially improve GPU, it'll once again be an intriguing investment opportunity for investors.