CarMax second quarter sales drop 8.3% to $2,282

The used car dealer reported its second quarter financial results in the second quarter of 2023 and consumers are struggling with affordability, according to Bill Nash, CEO of CarMax.

During the second quarter, the company sold 216,939 retail used vehicle units, a 6.4% drop from the same period in the previous year. The average retail selling price of CarMax went up 9.6% compared to last year's second quarter, with its gross profit per retail used unit going up nearly $100 to $2,282 despite steep market depreciation, the company said in a press release. Comparable store used unit sales went down by 8.3%.

Nash said during the used car dealer's earnings call, a marketwide decline in used auto sales was a result of macro factors such as vehicle affordability, persistent and broad inflation, climbing interest rates and low consumer confidence. The wholesale values were affected by a steep depreciation in the quarter. In August, inflation, measured by the consumer price index, increased by 8.3% from the previous year and 0.1% from the past month, according to data from the U.S. Department of Labor. The prices of used cars and trucks fell by 0.4% on a monthly basis, but they are approximately 7.8% higher than they were in August 2021, according to the price of the used car and truck.

The Federal Reserve has approved a third back-to-back 75 basis point interest rate hike earlier in the month, as it wanted to wrestle inflation closer to its 2% goal.

Nash said CarMax continued to grow market share despite the impact of inflation, interest rate hikes and other factors during the earnings call.

CarMax posted net revenues of $8.1 billion in the second quarter. Its net earnings fell from $285.3 million to $125.9 million in the same period last year.

Nash believes that industry sales were impacted by a shift in consumer spending prioritization from larger purchases to smaller discretionary items. We continue to offer a higher mix of lower-priced vehicles in response to the current environment and consumer demand.