Used Car News

CarMax Inc. performed well in its latest quarter. As for what the future holds, that’s hard to say.

The company reported a profit of $74.6 million in the quarter ended Nov. 30. CarMax reported a net loss of $21.9 million in the same period a year ago.
That seems like excellent news. But CEO Thomas Folliard said its far from where the company was a few years ago.
CarMax reported a profit of $29.8 million in the same quarter of 2007 and that was down 34 percent from the year before that.
Folliard offered no projections on results for the current quarter.
"In this environment, it's impossible to predict what happens," he said. "So much depends on what happens with new-car sales.
“We do the best job we can predicting the next seven days.”
CarMax’s inventory management plan operates week to week based on current sales.
Those sales were better in the latest quarter.
Net sales and operating revenues increased 19 percent to $1.73 billion from $1.46 billion in the same quarter of last year.
Comparable store used unit sales increased 8 percent for the quarter and total used unit sales rose 9 percent.
Folliard credited the company’s sales staff for doing a great job converting fewer shoppers and fewer finance approvals into more sales. He said the performance reflected CarMax’s commitment to training.
Matthew Fassler of Goldman Sachs Inc. speculated that CarMax gained market share over its competitors. Folliard declined to comment on that.
One advantage CarMax has over other dealers is access to retail finance.
The company announced it tightened credit standards at its CarMax Auto Finance arm, but struck a deal with Santander to provide more credit for sales.
Another area CarMax sought an edge was sourcing vehicles. The company bought 25 percent of the vehicles it appraised at its off-site appraisal centers.
Manheim chief economist Tom Webb said that reflects CarMax’s strong position with wholesale financing compared with other dealers.
An improved climate allows CarMax to move forward on opening some stores that it had built but waited to put into operation.
CarMax will open new stores in Dayton, Ohio, Cincinnati and Augusta, Ga. These are the only expansions planned at this time, Folliard said.