CarMax leads all publics in used sales, profits
Aided by the expansion of its used-only stores in the U.S. and U.K., Penske Automotive Group in the first quarter led all publicly traded auto retailers not named CarMax in retail used-vehicle sales. But include CarMax, and it wasn't even close.
Penske's used-vehicle sales rose 18 percent from a year earlier to 73,228 units. CarMax's fell 3.1 percent in its most recent quarter, which ended Feb. 28, but it still retailed 170,572 vehicles.
CarMax has long been the volume giant in the used-car market. What some don't realize is that the Richmond, Va., company also is the leader among publicly traded used-vehicle sellers in profits and margins.
A look at results for CarMax and its rivals in the latest quarter shows just how large the company's lead is — and where it faces challengers.
In gross profit per used vehicle retailed, CarMax led the field with $2,147, up 0.6 percent.
Lithia Motors Inc. was second, at $2,038, down 8.8 percent. No other rival's gross profit per used vehicle retailed topped $1,600.
Upstart Carvana Co., an online used-vehicle retailer known best for its vehicle vending machines, posted by far the largest increase in gross profit per used vehicle retailed. But its 63 percent gain left it at a paltry $902, nearly $200 behind the next-smallest tally: $1,090 for Sonic Automotive Inc.
|CarMax led in absolute sales, but not in sales gains ...|
|Q1 used-vehicle retail unit sales||% change|
|... and also led in per-unit profit ...|
|Gross profit per used vehicle retailed||% change|
|... and in used margin.|
|Gross margin on retail used vehicles|
|Q1 2018||Q1 2017|
In gross margin for retail used-vehicle sales, CarMax also led, with a margin of 10.7 percent, although that was off from 10.9 percent a year earlier. Lithia was No. 2, at 10.3 percent, down from 11.4 percent.
Carvana's retail sales more than doubled — admittedly from a small base — in the latest quarter to 18,464, closing the gap with its rivals. Consider: A year earlier, Carvana's unit sales of 8,334 were less than half Asbury Automotive Inc.'s 20,067. This quarter, Carvana trailed Asbury by only 2,106.
In addition to rapid growth from a small base, Carvana has another common startup trait: red ink. Its net loss widened to $52.7 million from $38.4 million, in part because of spending on expanding its network.
"We have opened 18 new markets already in 2018," CEO Ernie Garcia wrote in a letter to shareholders that doubled as Carvana's earnings release, bringing market coverage to 46 percent of the U.S. population, "and are on track to serve 57 percent of the U.S. population by the end of the year."
In comments to analysts later, he added that the "path to profitability is clear."
Of course, CarMax is no slouch in expansion, either. It plans to open 15 stores this fiscal year and another 13 to 16 the year after. So it's unlikely to give up its No. 1 ranking anytime soon.
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