CarMax is resetting its playbook heading into 2026. After a stretch of sliding sales and shrinking profits, the nation’s largest used-vehicle retailer is prioritizing one thing above all else: moving more cars.
The plan is straightforward. Lower prices where it counts, accept slimmer margins, spend more on marketing, and cut costs elsewhere. Leadership calls it a necessary reset to regain customer traction in a competitive used-car market.
Pricing Strategy Shifts to Drive Volume
Interim President and CEO David McCreight acknowledged that CarMax’s pricing has drifted out of sync with customer expectations.
“Our average selling prices have drifted upward and appear to be less attractive to customers,” McCreight said during the company’s Dec. 18 earnings call.
Rather than blanket price cuts, CarMax will take a more targeted approach. Interim Executive Chair Tom Folliard explained that reductions will vary by vehicle, with deeper cuts applied to select inventory to shift demand meaningfully.
A $100 to $200 reduction in the company’s overall average selling price, he noted, may translate to $500 or even $1,000 price drops on specific vehicles. The goal is to change buying behavior, not just headlines.
Marketing Spend Rises, Margins Fall
To support lower prices, CarMax is increasing marketing investment. The message is clear: reinforce value, close the pricing gap with the broader market, and re-establish CarMax as a first-choice destination for used-car buyers.
“We are lowering margins and supporting this action with marketing spend,” McCreight said, adding that the company is also improving how it communicates value to consumers.
At the same time, CarMax is tightening its belt. Management aims to reduce selling, general and administrative expenses by $150 million annually, even as marketing budgets rise.
Financial Pressure Shows in Q3 Results
The urgency behind the strategy is reflected in recent numbers. In the third quarter of fiscal 2026, which ended Nov. 30, CarMax reported net sales and operating revenue of $5.8 billion, down 6.9% year over year.
Net earnings fell sharply, dropping 50.4% to $62.2 million. Used-vehicle unit sales declined 8% to 169,557 vehicles, while the average used-car selling price edged up 0.9% to $26,383.
SG&A expenses totaled $581.4 million, consuming nearly all gross profit. That ratio climbed to 98.5%, up from 85% a year earlier, underscoring the margin pressure facing the business.
Leadership Reset Signals Urgency
CarMax’s strategic shift coincides with major leadership changes. Longtime CEO Bill Nash stepped down in November following weak second-quarter results. McCreight, a board member with a background in retail fashion, took over day-to-day operations as interim CEO.
Folliard, a 30-year CarMax veteran and former CEO, returned as interim executive chair.
“Recent results have been unacceptable and do not reflect the company’s potential,” Folliard said.
What this really means is simple: 2026 is shaping up as a back-to-basics year for CarMax, one where volume matters more than margins and execution matters more than optimism.
