CarMax has increased its loan loss provisions to $101.7 million in response to economic uncertainties and lower credit quality during the first quarter. The company attributes this rise to seasonal factors, weaker performance in 2022 and 2023 loan vintages, and an uncertain economic outlook. Despite these challenges, CarMax reported growth in retail used unit sales, which rose by 9.0%, and a record gross profit per retail used unit of $2,407.
The company credits its success to improved inventory management, pricing strategies, and its omnichannel customer experience. CarMax continues to leverage artificial intelligence, with its virtual assistant Skye showing a 30% improvement in containment rates. Digital capabilities supported 80% of retail unit sales during the quarter, with omnichannel and online sales accounting for 66% and 14%, respectively. While there was a slight decline from the previous quarter, the overall trend indicates growing adoption of omnichannel sales.
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CarMax Increases Loan Loss Provisions Amid Uncertainty
In response, the company’s CarMax Auto Finance (CAF) business boosted its provision for loan losses during the quarter to $101.7 million, up from $81.2 million in the same quarter a year earlier, according to a Friday (June 20) earnings release.