CarMax sales rise for first time in two years as used car demand revs up
12:39 pm Thursday, December 19th, 2024
By Nathan Gomes
(Reuters) -CarMax on Thursday posted its first quarterly sales increase in more than two years that also topped Street expectations, signaling a rebound in the used-car market and sending the retailer’s shares up as much as 12%.
A post-pandemic trend of customers opting for better deals on new vehicles equipped with improved features and limited used offerings from dealers in the $20,000 range had weighed on demand at used-car retailers.
“If you look at our under $20,000 vehicles, we’ve done a great job bumping that number up year-over-year,” CarMax CEO Bill Nash said on a post-earnings call.
About 30% of CarMax’s sales in the quarter were from vehicles costing less than $20,000, including the Toyota RAV4 and some variants of the Ford Mustang.
Nash said consumers were still “pinched from an inflationary standpoint,” which led them to consider alternatives or used cars.
CFRA Research analyst Garrett Nelson said improving affordability and lower interest rates are key tailwinds for auto dealerships.
“We think CarMax is particularly well-positioned to benefit from a sales volume perspective as a near-pure play on used vehicles,” Nelson added.
The Richmond, Virginia-based retailer reported a profit of 81 cents per share for the quarter through Nov. 30, compared with the average analyst expectation of 61 cents, according to data compiled by LSEG.
Revenue increased 1.2% to $6.22 billion, compared with estimates of $6.04 billion.
CarMax shares, which have gained about 6% this year through their last close, were up about 5% in afternoon trading.
(Reporting by Nathan Gomes in Bengaluru; Editing by Shilpi Majumdar and Sriraj Kalluvila)
