Market Share Outlook
Q: Why did market share slip, and when will it improve?
A: Market share declined due to affordability challenges and steep depreciation affecting consumer behavior and competitor pricing strategies. CarMax focused on profitable market share growth rather than lowering prices to boost sales . Recent data shows market share improvement in January, and they feel positive about February.

Affordability Impact
Q: How is affordability affecting car sales and demand?
A: Consumers face higher monthly payments, with average payments around $520–$530, up from the traditional $400, due to higher vehicle prices and interest rates . This puts pressure on demand, as customers struggle to fit these payments into their budgets .

Credit Tightening Effects
Q: How is tighter lending impacting sales?
A: Tightening lending standards are a headwind, especially affecting Tier 3 customers, whose sales have been cut in half . While CarMax's platform helps mitigate this, some sales are lost when CAF tightens credit.

Service Gross Profit Improvement
Q: Will service gross profit improve in 2025?
A: Management believes the pressure is transitory and expects significant year-over-year improvement. Initiatives include investing in RFID tracking, enhancing reporting, increasing MaxCare work, and adjusting labor and parts rates to offset inflation.

Wholesale Margins
Q: Can high wholesale gross profit per unit be maintained?
A: Expecting to maintain similar wholesale margins as achieved this year, reflecting operational improvements. Investments in standalone auction facilities are expected to enhance efficiency and profitability.

Vehicle Supply and Mix
Q: How is vehicle supply affecting sales, and are you shifting to older vehicles?
A: Supply isn't the issue; it's the price. The mix of vehicles sold remains balanced, with no significant shift towards older cars or smaller vehicles . Self-sufficiency in sourcing remains over 70%, a key advantage.

Return Policy Change
Q: Are you changing the 30-day return policy?
A: Yes, modifying to a 10-day money-back guarantee, still industry-leading. This change addresses experiential issues and reduces increased expenses associated with longer return periods.

First Quarter Trends
Q: How are first quarter sales trending?
A: Early first quarter shows mid-single-digit negative comps, due to choppy demand and consumer pressures . The consumer remains in a tough spot despite some positive demand signals .

Dealer Sourcing Growth
Q: How is dealer sourcing contributing to inventory?
A: Dealer-sourced units grew by 45%, with active dealers increasing by 50% . The MaxOffer program is providing quality inventory, skewing more towards retail vehicles, and enhancing self-sufficiency .

Depreciation Expectations
Q: Will there be excessive depreciation in the wholesale market?
A: Not expecting excessive depreciation; anticipating trends more in line with historical averages. Recent depreciation aligns with patterns from 2015 to 2019, rather than the unusual fluctuations of recent years.