CarMax crashes after a panic-buying bonanza

There are the surprises you want—like functional in-flight wifi or finding cash in your pocket—and then there’s whatever’s going on at CarMax: The biggest used-car seller in the US reported an unexpected sales plunge this week that’s scaring the rest of the tariff-squeezed auto industry.

CarMax’s stock fell 20% yesterday after the reseller reported only $6.6 billion in revenue for its latest quarter ending Aug. 31, airballing Wall Street’s $7 billion expectation:

• Declining car sales and rising risks of loan payment delinquencies contributed to a ~28% swan dive in earnings compared to the same time last year, CarMax said.
• Each month in the quarter was worse than the one prior, CEO Bill Nash told investors.

What goes up must come down. CarMax enjoyed a 42% increase in earnings in its prior quarter ending May 31, as drivers panic-bought vehicles to avoid potential price hikes from 25% auto tariffs that took effect in April. With used-car buyers front-loading their purchases, CarMax received fewer customers immediately afterward, experiencing what’s known as a pull-forward effect.

Zoom out: Thanks to the pre-tariff-fueled bump in car purchases, Cox Automotive upped its full-year projection yesterday for new vehicle sales in the US…but cautioned that sales may soon slow.