Used-vehicle retail giant CarMax Inc. said Thursday that persisting affordability challenges and deteriorated used-car market conditions again hampered the number of vehicles it was able to sell in its fiscal third quarter.
CarMax’s net income plunged 86 percent to $37.6 million during the quarter ended Nov. 30. Net revenue fell 24 percent to $6.5 billion, the company said.
It sold 180,050 retail used vehicles in the quarter, down about 21 percent from the 227,424 it sold in the year-earlier period. Comparable store used-vehicle sales fell 22 percent. In its earnings release, CarMax said vehicle affordability challenges “continued to impact our third quarter unit sales performance, as headwinds remain due to widespread inflationary pressures, climbing interest rates, and low consumer confidence.”
The company said it bought 238,000 vehicles from consumers and dealers, down 40 percent vs. last year’s record third quarter because of steep market depreciation and the company’s choice to “deliberately slow buys.” CarMax said 224,000 of those vehicles were purchased from consumers, down 42 percent year over year.
It said it obtained 14,000 vehicles through MaxOffer, the company’s digital appraisal tool for dealers. That was up 16 percent from the year-earlier period.
“In response to the ongoing pressures across the used car industry, we have taken deliberate steps to support our business for both the near-term and the long-term,” CarMax CEO Bill Nash said in a statement. “We are managing our business prudently, and prioritizing initiatives that reduce costs, unlock operating efficiencies, profitably grow market share and create better experiences for our associates and customers.”
The company said it took “deliberate actions” in response to used-market conditions, including reducing its selling, general and administrative expenses; increasing the mix of older retail vehicles sold; increasing CarMax Auto Finance interest rates; reducing planned capital expenditures; and “prudently managing” its capital structure, which included pausing share buybacks.
CarMax shares slipped 8.8 percent to $54.21 in early trading Thursday.
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