Delayed tax refunds led to a slightly higher gross profit per wholesale unit at CarMax, the company reported during its quarterly earnings call for the quarter ending May 31.
The delayed tax refunds this year, company officials noted, put more people in the market, driving up demand, and in effect sligthly driving up prices.
"Those customers, when they get those refunds, they come out in the market. When they come out in the market, it drives the prices up. So that's why we cited it as a factor, because it was a little bit of a reversal [from the] trends that we've seen lately," said Bill Nash, president and CEO of CarMax during the company's earnings call.
During the quarter, the company reported a gross profit per wholesale unit of $1,012, about 2% higher than the same period last year. Overall gross profit per used-vehicle was $2,212, roughly 10% higher than the same time last year.
Total used-vehicle unit sales increased by 14.1% compared to the prior-year period, on a same-store basis, according to the company. Wholesale vehicle unit sales, however, were flat compared to the same time last year, due in part to appraisal traffic being down.
Even with flat unit sales, stronger profit per unit led CarMax's wholesale segment to a 1.7% year-over-year increase to total gross profit, at $104.7 million. Overall, used-vehicle gross profit was also up for the company. The company's reported $431.9 million in used-vehicle gross profit was a 14.7% year-over-year increase.
The company continues to see a higher percentage of its used unit sales come from younger vehicles. Thanks in part to higher leasing penetration rates in recent years, the company's supply of younger vehicles has been growing, and its supply of 7- to 9-year-old vehicles — those that originally sold during the Great Recession — has been dwindling.
“As a percentage of our sales mix, 0 to 4-year old vehicles increased over 78% versus more than 76% in last year’s first quarter,” said Nash. “As a percent of sales, large and medium SUVs and trucks rose to 27% in this first quarter, similar to the fourth quarter but about 3 percentage points higher than last year.”
CarMax reported its quarterly results on June 21 as part of the first quarter of its fiscal year for 2018.