September 29, 2026
| Q2, three months to Aug 31 | 2026 | 2025 |
|---|---|---|
| Retail used units | 227,391 | 199,729 |
| Gross profit per retail used car | $2,105 | $2,216 |
| Average retail selling price | $27,623 | $25,993 |
| CarMax Auto Finance income | $135.6 million | $102.6 million |
| Diluted earnings per share | $1.16 | $0.64 |
Source: CarMax second-quarter fiscal 2027 release, September 29, 2026.
Price for volume
$111 per car is what CarMax gave up to sell more of them. The company’s second-quarter release says the lower retail margin reflects “the continuation of pricing actions to support an improved sales trend.” The average retail selling price still rose about $1,600, or 6.3%, to $27,623, so the pricing shows up in margin per car rather than in a lower average ticket.
13.8% growth came against an easy base. In the same quarter a year earlier, CarMax’s retail used units fell 5.4% and comparable-store units fell 6.3%. Over the first six months of the fiscal year, retail units are up 6.5%, to 457,684, so nearly all of the half’s growth landed in the second quarter.
160,344 wholesale units went through CarMax’s auctions, up 15.9%, at $858 of gross profit each, down $135, which left wholesale margin dollars flat at $137.6 million. CarMax bought 310,107 vehicles, up 5.9%: 262,570 from consumers, flat on a year earlier, and 47,537 through dealers, up 53.7%.
Where the profit came from
$223.1 million in pre-tax earnings compares with $127.1 million a year earlier. Retail used-car gross profit rose 8.1%, to $478.6 million, because volume outran the smaller margin. Other gross profit, which is mostly extended protection plans and service, rose 33.1% to $183.3 million: plan margin dollars were up $26.5 million, at $623 per retail car, and service margin was up $22.0 million.
CarMax Auto Finance earned $135.6 million, up 32.1%, mainly because its loan-loss provision fell $28.8 million to $113.4 million. The prior-year quarter carried extra provision for what CarMax called the worsening performance of older loan vintages, a pattern GCBC found across the market in August, when defaults were coming from older paper rather than new approvals. The finance arm also booked a $16.6 million gain on selling auto loans.
22% of CarMax’s Tier 2 credit volume went through its own finance arm, against 10% a year earlier, making it the largest lender in that band. The weighted average contract rate was 11.8%, up 60 basis points, and the loan-loss allowance rose to 3.07% of loans held for investment from 2.95% on May 31. Lower-credit lending is growing, and so is the reserve against it.
SG&A rose 4.6% to $628.6 million, because incentive pay came back from a sharply reduced year-earlier level and unit growth added variable costs, while cost per unit sold fell $157 to $1,621. CarMax cites cuts to field and corporate payroll and says it remains on track for $200 million in exit-rate SG&A savings by the end of fiscal 2027.
Who acts differently
Keith Barr, CarMax’s chief executive, credited the quarter’s “81% EPS growth” to stronger “price competitiveness,” higher Extended Protection Plan margins and a larger share of Tier 2 loans. CarMax bought back no shares in the quarter and now plans to resume modest repurchases in the third quarter, with $1.31 billion left under its authorization. For franchised dealers’ used departments and online sellers, the signal is that CarMax calls its thinner margin a continuing policy.
Wholesale values are drifting lower into CarMax’s third quarter. Cox Automotive’s Manheim index fell 1% from August to 206.2 in mid-September, 0.4% below a year earlier, while at the bottom of the market the cheapest used cars were still the fastest-appreciating vehicles on dealer lots in July.
What to watch
November 3 is CarMax’s virtual Strategic Update, where it says it will give details on its growth plan, initiatives and milestones. December 17 brings the third-quarter results, for the three months to November 30, and the two lines to compare are profit per retail car against $2,105 and unit growth against 13.8%.
