Carvana sought to disrupt the used-car market. Sales soared, but then came the less glamourous business of actually registering the cars.
CarMax reported better-than-expected quarterly earnings early Friday as strong pricing for used cars offset weaker volumes. CarMax stock jumped Friday, retaking a key level. "GPUs (gross profit per unit) were especially strong, above the historical band despite the increase in wholesale prices," Stephens analyst Daniel Imbro wrote in a note to clients on Friday.
Last year, used-car retailers were on a roll, fueled by new-vehicle shortages, low interest rates and a strong consumer. CarMax the largest such retailer in the U.S., reported on Friday that its total revenue grew 21% in the quarter ended May 31 compared with a year earlier—higher than the 18% increase analysts polled by Visible Alpha were expecting. The boost in revenue was mostly thanks to higher prices: While CarMax sold 11% fewer used cars, consumers had to shell out $6,311 more per vehicle on average, a 28% increase from a year earlier.