CarMax keeps gross above $2,100 as Q2 sales rise 9%

CarMax managed to keep its gross profit per used vehicle turned above $2,100 during a quarter that saw the company’s retail sales climb more than 9 percent.

According to the company’s second-quarter financial statement released on Tuesday, CarMax’s total used vehicle unit sales grew 9.2 percent, and comparable store used unit sales increased 4.6 percent versus the prior fiscal year’s second quarter.

“Comparable store used unit sales were driven by improved conversion, which benefited from the strong execution of our store teams,” CarMax officials said about Q2 of its current fiscal year that ended on Aug. 31.

Company dealerships retailed a total of 156,516 used vehicles in Q2, up from 143,325 units a year earlier.

The gross on those retailed units came in at $2,166, just $7 less than the year-ago quarter.

Meanwhile, CarMax highlighted that its wholesale vehicle unit sales grew 8.7 percent year-over-year. The company sold 106,522 units through its wholesale division, up from 97,989 units in Q2 of its previous fiscal year.

“Wholesale unit sales benefited from the growth in our store base and a calendar shift that resulted in one extra Monday auction date compared with the prior year’s quarter,” CarMax officials said.

“We hold a majority of our wholesale auctions on Mondays,” they continued. “Excluding the extra Monday, wholesale vehicle unit sales would have increased approximately 5.0 percent year-over-year.”

Not only did the wholesale volume rise, CarMax enjoyed an 8.8-percent improvement in wholesale vehicle gross profit per unit to $951 from $874.

On the top line, CarMax reported that its net sales and operating revenues increased 7.9 percent to $3.88 billion. As a result, the company’s total gross profit increased 12.5 percent versus last year's second quarter to $521.4 million. Part of that gross profit rise came from a $10.4 million one-time increase in service department gross profits.

“This increase resulted from a change in timing in our recognition of reconditioning overhead costs. These costs, which previously had been expensed as incurred, are now allocated to the carrying cost of inventory,” CarMax said.

Editor’s note: For more coverage of CarMax’s Q2 performance including commentary from company executives, watch for a report coming in a future installment of Auto Remarketing Today.