One of the largest used-car retailers in the United States, CarMax runs hundreds of stores where shoppers browse big lots of pre-owned vehicles, buy online or in person with fixed no-haggle prices, and finance through its own lending arm, CarMax Auto Finance. It grew out of an experiment code-named "Project X" launched by electronics giant Circuit City, opening its first store in Richmond, Virginia, in 1993. The name was coined by a branding firm to suggest maximum selection and value — and that first store stocked cars in a warehouse-style lot with clear prices printed on every windshield.
Used unit sales were flat as pricing cuts lowered gross profit per unit by $230 in Q1 FY2027
Used unit sales were flat after three quarters of decline and a full-year drop. rose 6.2% to $8.01B and was $1.31, with at 10.7% as pricing actions cut used vehicle per unit by $230 and income dipped 1%. The company stabilized volume but is earning less per car, leaving profitability dependent on cost savings not yet realized.
Key takeaways
Used unit sales were flat , halting the 1.1% FY2026 decline and reversing the 8.0% Q3 FY2026 drop, as pricing actions to support sales continued.
Total and operating revenues rose 6.2% to $8.01B, driven by a 4.5% increase in used vehicle average selling price and a 14.0% increase in wholesale vehicle revenues.
Used vehicle fell 9.5% to $501.4M as gross profit per unit declined $230 to $2,177 from continued pricing actions.
Section summaries
Management's Discussion and Analysis
Used unit sales were flat YoY as pricing actions lowered gross profit per unit by $230, while CAF income dipped 1% on a smaller loan portfolio.
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Total and operating revenues rose 6.2% to $8.01 billion, driven by a 4.5% increase in used vehicle average selling price and a 14.0% jump in wholesale vehicle revenues.
income decreased 1.0% to $140.2M as a smaller average loan portfolio reduced total interest margin, largely offset by higher-margin Tier 2 loans and servicing income.
expenses decreased 3.7% to $635.2M on a $25.3M reduction in compensation and benefits, partially offset by an $8.0M increase in advertising.
fell to $17.6M from $299.5M a year earlier, primarily due to a smaller decrease in and changes in auto loans held for investment and sale.
The rose to 2.95% of auto loans held for investment, driven by expansion into Tier 2 credit and seasonal credit mix shifts during tax season.
What changed
Used vehicle unit sales in Q1 FY2027: earlier filings flagged whether the 1.1% FY2026 decline would reverse toward the 3.1% FY2025 gain — they came in flat, neither reversing nor extending the drop.
Progress on the $200M exit-rate savings target for FY27: SG&A fell 3.7% to $635.2M this quarter, an early step toward the target after Q3 FY2026 SG&A rose to 98.5% of .
: the allowance rose to 2.95% of auto loans held for investment from 2.78% at FY2025 end and 2.95% was above the Q3 FY2026 level of 2.70%-range, reflecting Tier 2 expansion rather than the prior 2022-2023 origination pressures.
Pace of share repurchases: the FY2026 10-K noted a Q4 pause and $638.1M full-year equity reduction; this Q1 filing does not report activity, leaving the restart status unstated.
Used vehicle per unit fell to $2,177 from $2,253 in FY2026 and $2,235 in Q3 FY2026, extending the margin decline management pledged in Q3 FY2026.
What to watch
Used vehicle unit sales in Q2 FY2027 to see if the flat Q1 reading resumes growth or turns negative.
Used vehicle per unit next quarter after it fell to $2,177 on continued pricing actions.
and provision next quarter after the allowance rose to 2.95% on Tier 2 expansion.
trajectory against the $200M FY27 exit-rate savings target after the 3.7% Q1 reduction.
Disclosure of activity after the Q4 FY2026 pause.
Used vehicle fell 9.5% to $501.4 million as gross profit per unit declined $230 to $2,177, reflecting continued pricing actions to support sales.
SG&A expenses decreased 3.7% to $635.2 million, with a $25.3 million reduction in compensation and benefits partially offset by an $8.0 million increase in advertising spend.
income decreased 1.0% to $140.2 million, as a smaller average loan portfolio reduced total interest margin, largely offset by higher-margin loans and servicing income.
The rose to 2.95% of auto loans held for investment, driven by expansion into credit and seasonal credit mix shifts during tax season.
fell to $17.6 million from $299.5 million, primarily due to a smaller decrease in and changes in auto loans held for investment and sale.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our market risk since February 28, 2026. For information on our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the fiscal yea…
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There have been no material changes to our market risk since February 28, 2026. For information on our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026.
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For a discussion of certain legal proceedings, see Note 15 to the consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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For a discussion of certain legal proceedings, see Note 15 to the consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
In connection with information set forth in this Form 10-Q, the factors discussed under “Risk Factors” in our Form 10-K for fiscal year ended February 28, 2026, should be considered. These risks could materially and adversely affect our business, financial condition, and results…
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In connection with information set forth in this Form 10-Q, the factors discussed under “Risk Factors” in our Form 10-K for fiscal year ended February 28, 2026, should be considered. These risks could materially and adversely affect our business, financial condition, and results of operations. There have been no material changes to the factors discussed in our Form 10‑K.