In the battle for used-vehicle inventory, car dealers found the start of 2026 even tougher to compete with Carvana and CarMax.
What we know: Polling several dozen private franchise dealers about the two national brands, Stephens, Inc., found a near consensus among respondents that Carvana and Carmax were formidable competitors in today’s tight market.
Cox Automotive’s vAuto reported used vehicle days supply had fallen from 52 days in December to 37 at the end of March. In its results, one dealer even told Stephens, Inc., that it is “the tightest used market since COVID.”
Notably, dealers felt that Carvana and CarMax added to the market's tightness with their national reach and aggressive bidding on vehicles.
Dealers responded that many customers were showing up at their lot with an offer from Carvana and CarMax on their trade-in.
They would then work to convince customers of the tax benefit of using a trade-in to buy a new vehicle with varying success.
What they’re saying: Dealers said they could match the two on service and value once a customer was on the lot.
Still, analyst Jeff Lick of Stephens said the issue facing dealers is getting some of the customers looking to Carvana and CarMax to the lot.
“If somebody shows up on the car lot, they’re there for a reason, and they’re willing to buy from a car lot. The bigger issue that some of the dealers have is that Carvana has created a whole complete process in your driveway system. So you may never see that person…There’s a whole new generation of people who might be 25 that all they’ve ever done is digital.”
Jeff Lick, analyst at Stephens
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Building on that: Sourcing vehicles locally and selling nationally to capitalize on demand and pricing in different markets was mentioned as an advantage for Carvana and CarMax. Stephens said it’s not exclusive to the two companies.
“The bigger dealerships do that as well. There’s dealerships that have stores in different regions that move cars around,” Lick said.
Carvana and CarMax were contacted by Car Dealership Guy about the study and declined to comment.
The takeaway: This study highlights the need for dealers in a competitive market for inventory, which Stephens found to be down 2-6% year-over-year, to look for all avenues for sourcing vehicles, including their margins on trade-ins.
“They’ve got to continue to be proactive and aggressive and figure out ways to source vehicles,” Lick said. “Let’s just say, you’re a dealer who says I don’t want to do any used deals unless I make $2,000 or $1,500. The problem is that you walk away from a new customer, and you walk away from all the services that new customers represent. You walked away from that customer because you turned down the trade.”
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