CarMax beats quarterly revenue estimates as used-car prices rise
Rising used-vehicle prices and firmer wholesale demand are supporting CarMax's first-quarter sales performance as affordability pressures continue to weigh on the broader auto retail market. The company also sees its shares climb more than 5% in premarket trading after revenue comes in above analyst expectations.
Highlights
- CarMax reports first-quarter revenue of $8.01 billion, up 6.2% year-over-year and exceeding analyst estimate of $7.4 billion.
- Average used-vehicle price rises 4.5% to $27,288, but first-quarter profit falls to $185.6 million from $210.4 million a year earlier.
- Retail gross profit per used vehicle declines to $2,177 while higher new-vehicle prices and tariffs support wholesale demand for pre-owned cars.
First-quarter sales and margin trends
As reported by Reuters, CarMax posts first-quarter revenue of $8.01 billion, up 6.2% from a year earlier and above the average analyst estimate of $7.4 billion compiled by LSEG.The Richmond, Virginia-based used-car retailer says average used-vehicle prices rise 4.5% from a year earlier to $27,288 during the quarter. First-quarter profit is $185.6 million, or $1.31 per share, compared with $210.4 million, or $1.38 per share, a year earlier.
Retail gross profit per used vehicle falls to $2,177 from $2,407 a year earlier, while wholesale gross profit per unit is $1,046, compared with $1,047 a year earlier.
Auto market pressures and demand outlook
Used-car companies continue to face pressure on margins as affordability concerns weigh on retail demand. At the same time, higher new-vehicle prices linked to increased U.S. tariffs are expected to push more buyers toward pre-owned vehicles.That backdrop helps explain stronger wholesale demand in the quarter, even as profitability remains below the year-earlier level in parts of CarMax's retail business.
In our earlier market wrap, we outlined how investors were heading into Wednesday focused on the Federal Reserve’s next rate decision alongside key corporate catalysts, including CarMax’s upcoming earnings report. We also noted the broader backdrop of steady Treasury yields and falling oil prices, which were shaping near-term sentiment across sectors.
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