CarMax Stock Drops Over 9% in 2025 as Used Car Sales Decline Amid Rising Loan Costs
In 2025, CarMax faces a significant profit shortfall due to weakening used car demand and increased expenses from loan loss provisions, impacting its stock performance.
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Highlights
- CarMax’s Q2 2024 profit fell short as used vehicle demand weakened and loan loss expenses rose.
- Retail, comparable store, and wholesale used car sales all experienced declines during the quarter.
- The finance division’s income dropped sharply due to increased loan loss provisions and narrower interest margins.
Shares of CarMax (KMX), the nation’s leading used car retailer, plunged more than 9% in early trading after releasing Q2 fiscal 2024 results that missed profit expectations. The slowdown in used vehicle demand combined with higher loan loss costs pressured earnings.
CarMax reported earnings per share (EPS) of $0.75, down 5% year-over-year and below analyst forecasts. Revenue declined 13.1% to $7.1 billion but still surpassed estimates.
Used vehicle retail sales decreased by 7.4%, comparable store sales dropped 9%, and wholesale unit sales fell 11.2% during the quarter.
The company’s financing segment saw a 26.2% income decline to $135 million, driven by compressed net interest margins and increased provisions for potential loan losses.
CEO Bill Nash emphasized that despite ongoing industry-wide challenges, CarMax continues to make steady sequential progress in its operations.
CarMax temporarily paused share buybacks during the quarter but plans to resume them soon, with $2.45 billion remaining under its repurchase authorization as of August.
Following the earnings release, CarMax shares hit their lowest price since May 2024.
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