If used cars are tight, shouldn't we expect Carmax to be getting better prices? I don't think they have a 'Costco-like' dedication to fixed margins; in the earnings call, they said, for instance, "As always, we will continue to test price elasticity and monitor the competitive landscape."...

In my opinion, I think they have been at this game a long time and they know how the market cycles. They could try to play the game of the local independent 'sleazy' car dealer and gouge customers in need of a car, but that doesn't build customer loyalty when you're in a commodity business like used cars. If you want a new Ford, you have to go to the Ford dealer. If you want a used Ford, you can go anywhere. Their customer base is the perpetual used car buyer and I think they want to be viewed as the fair price, higher quality location.

If you look back at their gross margins per vehicle for the last 20yrs they are consistently $2k per vehicle. They have come up slightly post pandemic but likely mostly due to general inflation. The used car market is so highly commoditized they can't get too crazy with pricing or they suffer from slower turn. And slow turn kills margins over time with floor plan interest and 'lot rot' depreciation. Post pandemic was a wild time for any and all used items. Used boats and RVs were even appreciating in value at a crazy rate from 2019 to 2022. Now, that game is over. Some lenders are ceasing lending on boats are RVs right now. Not a good time to be sitting on inventory that looked like gold 12 months ago.

Jeff