I’ve got a soft spot for CarMax. The shopping is simple, the people are helpful, and you don’t have to argue over price. But their latest earnings made me pause. This might be a warning sign for the whole used car market.
What CarMax just reported
CarMax’s fiscal Q2 (ended Aug. 31, 2025) missed big. Earnings were $0.64 per share, well under expectations, and same store used unit sales fell 6.3%. The average retail selling price was about $26,000. Investors hated it the stock dropped hard after the report.
Management also said used car values fell fast about $1,000 per vehicle in a single month during the quarter. That kind of sudden markdown usually means dealers were holding inventory that shoppers felt was too pricey. In plain terms: buyers pushed back…..finally
Big picture, the company’s own release shows fewer cars bought from consumers and pressure on other revenue tied to unit sales, more hints that demand is soft at today’s prices. On top of that, financing isn’t helping. Average used auto loan rates are around 14%, which makes monthly payments sting even when sticker prices dip.
Why I still like CarMax
- No haggling. The price is the price, which keeps the process calm. CarMax literally states its upfront prices are set.
- Try before you buy perks. Many locations offer 24-hour test drives, so you can live with the car for a day.
- Return & warranty. Today it’s a 10 day money back guarantee plus a 90 day/4,000-mile limited warranty. (They used to advertise 30 days check your store’s current policy.)
- Service support. You can bring the car back for service at CarMax centers or RepairPal shops, with a 12-month/12,000-mile warranty on qualifying repairs. MaxCare extended service plans are optional.
But here are the cons
- Fees add up. Like most dealers, CarMax locations charge document/processing fees that vary by state (e.g., $799 in FL, $225 in TX, $85 in CA). These are real costs you’ll see on your paperwork.
- Shipping (transfer) fees. If you have a car moved from another store, the shipping fee is nonrefundable and due before the car ships. That can sting if you change your mind.
- Financing risk. CarMax’s finance arm has been raising loss provisions, a sign that loans made in this high rate era are riskier. Translation: don’t assume their financing is your best deal, shop around outside of their deals.
What this says about the used car market
Even with some small price drops, buyers are sensitive. High rates, inflation, and quick depreciation are forcing dealers to cut faster, which is exactly what CarMax just experienced. Wholesale price gauges have been flat to slightly higher lately, but retail demand hasn’t fully kept up another hint that used cars remain stretched for many budgets.
My take
I still like CarMax for the no drama process and safety nets. But these results tell me the market may be topping out at current price levels. If you’re shopping, use their tools test drive it, lean on the return window and be picky. Compare total out the door prices (fees included) and bring your own pre approved loan. If the payment doesn’t feel right, wait. The numbers suggest more deals could be coming.
