CarMax $KMX ( ▲ 1.37% ) is aiming to turn around its operations in 2026 with a business strategy anchored in returning to the basics.
The details: Amid growing demand for used vehicles, the retailer is focused on lowering its average selling prices and adjusting its spending, explained top brass during an earnings conference call, reports Wards Auto.
The retailer’s price-cutting plan is not an all-the-same approach, but a more varied strategy where, for example, a percentage of its cars are $1,000 lower, and other units are $500 less expensive.
CarMax’s spending adjustments include investing more in marketing while slashing selling, general, and administrative expenses by $150 million per year.
What they’re saying: “Our average selling prices have drifted upward and appear to be less attractive to customers,” said David McCreight, interim president and CEO, adding, “To ensure that CarMax is a preferred choice, we will work to shrink the gap between our offering and the marketplace.”
Why it matters: For franchised and independent dealers, CarMax resetting prices and ramping up marketing is a signal that the nation’s biggest used-car retailer is willing to sacrifice some gross to win back volume. Local stores might feel that pressure on used pricing, merchandising, and payment offers, especially on bread-and-butter inventory in the mid-$20K range.
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Between the lines: News of CarMax’s back-to-the-basics strategy comes at a critical juncture as the retailer tries to turn its business around in a tighter used-car market.
For the third quarter of its 2026 fiscal year, which ended Nov. 30, CarMax’s net sales and operating revenues were $5.8 billion, down 6.9% vs. the same quarter a year ago.
The used-car retailer’s net earnings were down 50.4%, to $62.2 million, with its used-vehicle unit sales at 169,557 in the third fiscal quarter, an 8% drop compared to a year ago.
CarMax’s average vehicle selling price for its fiscal Q3 period was $26,383, up 0.9% compared to a year ago.
What they’re saying: “Recent results have been unacceptable and do not reflect the company’s potential,” said Interim Executive Chair Tom Folliard in the Dec. 18 conference call.
Bottom line: As CarMax leans into sharper pricing and leaner costs to claw back volume, dealers should assume more aggressive competition on used-car price and perceived value. Stores that respond with smarter acquisition, disciplined recon, transparent pricing, and stronger merchandising (not just deeper discounts) will be best positioned to hold their own against a retooled CarMax in 2026.
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