•Carmax’s FY2Q23 sales of used cars increased +2% y/y to $8.1B driven by growth in average selling prices partially offset by lower volume (retail unit sales declined -6.4% y/y & wholesale unit sales were down -15.1%).
•While Carmax’s ability to source vehicles from consumers represents a competitive advantage, many of these cars are older and fail to meet their standards for consumer sales & are subsequently sold in wholesale at lower margins (wholesale profit per unit declined -12% y/y to $881 during the quarter) contributing to a -9.6% decrease in total gross profit.
•Carmax purchased 323,000 cars from consumers during the quarter, down -11% from last year’s record results.
•Management reported that consumer confidence is currently even lower than at the height of covid.
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