5-year-old cars grab more CarMax sales
CarMax Inc.'s used-vehicle sales tilted in the most recent quarter toward cars and trucks that were older than the retailer has typically sold, CEO Tom Folliard said. He also identified the locations of 10 stores the retailer plans to open by next March.
In June 2011, vehicles 5 years old and older made up only about 15 percent of the company's unit sales, about the same level that has been true historically, Folliard said. But in the fiscal fourth quarter that ended Feb. 29, Folliard said, vehicles 5 years old and older accounted for 25 percent of the company's sales.
"We responded to consumer demand and shifted to the older mix," Folliard told analysts and journalists during a conference call discussing CarMax earnings.
CarMax, by far the largest used-vehicle retailer in the United States, specializes in used vehicles 1 to 6 years old.
Folliard said sales of SUVs dropped 4 percentage points to 27 percent in the most recent fiscal year, compared with 31 percent the previous year. Sales of mid-sized and small cars were up by about the same percentage. He attributed the sales shift to rising gasoline prices.
"It's nothing like what we saw in May '08, when gas hit $4 and we saw a dramatic shift in consumer behavior," Folliard said. "This has been a little more gradual.
"It doesn't matter to us. We're happy to sell smaller cars; we're happy to sell SUVs. Our margin is more on a per-unit basis."
In December, Folliard had said CarMax would open 10 stores in the fiscal year that began March 1, and 10 to 15 stores in each of the three following years, "if things don't get any worse" in the general economy.
The first of those stores opened in March in Lancaster, Pa., bringing CarMax's used-car store total to 109 in 54 markets.
One store is planned for the each of the following cities: Bakersfield, Calif.; Oxnard, Calif.; Nashville; Fort Myers, Fla.; Jacksonville, Fla; Naples, Fla.; and Des Moines, Iowa. The company plans to open two stores in Denver.
In its fourth quarter that ended Feb. 29, CarMax's used-vehicle sales increased 6 percent to 105,769 units while its new-vehicle sales dropped 12 percent to 1,727.
In the fiscal year that ended Feb. 29, CarMax's used-vehicle sales increased 3 percent to 408,080, and new-vehicle sales dropped 7 percent to 7,679.
You can reach Arlena Sawyers at email@example.com.