On the Dash:
- CarMax’s comparable used-vehicle sales fell 9% in Q3, exceeding analyst expectations.
- The company will accept lower margins and increase marketing to attract buyers.
- Competition from online rivals, including Carvana and Amazon, pressures CarMax to evolve its business model.
CarMax is adjusting its strategy to regain customers after slumping sales cut its market value in half this year. The used-vehicle retailer plans to accept lower margins and increase advertising spending in a bid to drive traffic and restore sales.
The Richmond, Virginia-based company reported a 9% decline in comparable used-vehicle sales in the third quarter, exceeding analyst expectations of an 8.4% drop but remaining within its previously forecast 8% to 12% range. Earnings fell to 43 cents a share, above the company’s guidance of 18 to 36 cents and analyst projections of 38 cents.
To control costs, the company is targeting $150 million in general and administrative savings by fiscal 2027, CarMax CFO Enrique Mayor-Mora said during an earnings call. Earlier this year, the company cut roughly 30% of its customer service workforce. While these measures may help stabilize the business, the company faces pressure to rethink its broader business model and expand its online offerings.
CarMax is competing in a challenging market environment marked by tariff-driven cost increases and tightening consumer credit. Rivals such as Carvana have captured market share with fully online sales models, and Amazon is entering the used-vehicle space with Ford vehicles on its platform, intensifying competition.
Interim leadership says immediate pricing and marketing initiatives are expected to improve sales, even as near-term earnings remain pressured. The company aims to strengthen its appeal to customers seeking convenience and digital purchasing options.
