CarMax FY 2Q15 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Subprime auto lending has cooled off a little

“The Tier 3, as I said, it’s a combination of factors. We’re clearly seeing them continue to provide, I’ll say less attractive offers than they were a year ago, less compelling offers for the customer so therefore we’re seeing less conversion in that space. But as I mentioned, it’s a byproduct of their behavior plus what they’re seeing coming through the door, and we’ve seen some pickup in the behavior of our other partner lenders.”

Auto lenders changed their behavior in Q3

“we saw it happening at the very end of Q3. There was a notable shift in behavior. I think—you know, we have no reason to think behavior is changing from where it is today. We want those guys to run a profitable business that’s going to be sustainable and support our customers for the long run. They are going to test and make changes as appropriate for their portfolio, and we wish them all the best of luck in doing it.”

90% of customers have been getting financing

“90% of customers are getting approval from somebody in our kind of hemisphere of lending, and that number has been—you know, 90 has kind of been as high as it’s ever been for us, but it’s been stable there for a couple of years now.”

Average retail price of a car is 30k

“The only time we’ve ever seen significant drop-off in our average retail was during the recession, when we saw our average retail drop by over $2,000. Other than that, due to inflation and due to just continued increased costs of new cars, a new car now is over $30,000, it’s just not something that I think will go backwards.’