CarMax at a Crossroads: Leadership Shake-Up Ahead of Crucial Earnings

RICHMOND, VA – November 25, 2025

When CarMax executives host their third-quarter conference call on December 18, 2025, investors will be listening for more than just financial results. They will be seeking a narrative of revival. The nation's largest used auto retailer, a company that long defined itself by disrupting the industry with transparency and scale, now finds itself at a critical inflection point. A recent, decisive leadership overhaul coupled with a grim preliminary outlook has transformed a routine earnings announcement into a high-stakes referendum on the company’s future direction.

The stage was set with a stark preliminary announcement for the quarter ending November 30. CarMax projected a significant 8% to 12% decrease in comparable store used unit sales and net earnings per share squeezed to between $0.18 and $0.36. This forecast, which includes non-recurring expenses tied to the very leadership changes meant to fix the slump, paints a picture of a titan under duress. For a company that sold nearly 800,000 used vehicles in the prior fiscal year, such a downturn signals more than a soft quarter; it points to fundamental challenges that its new leadership must urgently address.

A Market in Flux: Reading the Economic Tea Leaves

CarMax does not operate in a vacuum, and the used car market of 2025 is a landscape of contradictions. While the chaotic price surges of the pandemic have eased, affordability remains the single greatest headwind for consumers and retailers alike. With average used car loan APRs hovering around a punishing 14%, the cost of financing has pushed many potential buyers to the sidelines or forced them down-market. This trend is evident in the strong demand for older vehicles, particularly those under $15,000, a segment where inventory is increasingly scarce.

While inventory levels have climbed to a 2025 high of 2.26 million units, providing some relief, the market dynamics are complex. The average transaction price for a three-year-old vehicle still climbed 5% year-over-year in the third quarter, demonstrating persistent pricing pressure on desirable, late-model used cars. This environment creates a challenging puzzle for a volume-driven retailer like CarMax.

Perhaps most telling is a comparison with its peers. While CarMax braces for a double-digit sales decline, competitors have been reporting robust growth. In their recent Q3 results, AutoNation saw a 7.6% rise in used vehicle revenue, Lithia Motors reported an 8.9% increase, and a resurgent Carvana stunned with a 55% year-over-year revenue surge. This divergence underscores that CarMax's struggles are not solely a product of market conditions but are also company-specific, validating the board's assessment of “underperformance relative to potential” and lending urgency to its recent strategic pivot.

New Captains at a Critical Juncture

The most visible sign of this pivot is the dramatic change in the executive suite. Effective December 1, Bill Nash, who presided over a period of massive physical and digital expansion, stepped down as CEO. In his place, the board installed a new interim leadership duo: David McCreight as Interim President and CEO and Tom Folliard as Interim Executive Chair.

This is no ordinary placeholder arrangement. It represents a strategic fusion of outside perspective and deep institutional knowledge. McCreight, a CarMax board member since 2018, brings a wealth of experience in transforming major retail and digitally-native brands like Urban Outfitters, Anthropologie, and Lulu's Fashion Lounge. His background suggests a mandate to re-energize CarMax’s omni-channel strategy and brand positioning in a market where digital-first competitors are gaining ground.

Complementing McCreight is Tom Folliard, a CarMax veteran who served as the company’s highly respected CEO from 2006 to 2016. His return to an executive role from his position as Non-Executive Chair is a powerful signal to investors that the board is taking direct, hands-on control. Folliard’s public acknowledgment that recent results “have not met expectations” was a candid admission that set the stage for this intervention. The upcoming call will be the first opportunity for investors to hear directly from this new team and scrutinize their plan to restore sales momentum, enhance profitability, and manage costs.

The Engine Under the Hood: CarMax Auto Finance Under Pressure

Beyond the showroom floor, the true engine of CarMax's profitability lies in its massive financing arm, CarMax Auto Finance (CAF). With a portfolio approaching $18 billion, CAF’s performance is as critical to the company's health as its vehicle sales. The company’s preliminary outlook noted that its loan loss provision is “trending in-line with expectations,” a testament to disciplined risk management in a turbulent credit environment.

However, the broader auto lending sector is flashing warning signs that cannot be ignored. Subprime auto loan delinquencies (60+ days past due) soared to a record 6.65% in October, the highest level in three decades. As consumers grapple with financial strain, lenders are seeing an increase in defaults. This pressure is compounded by the trend of lengthening loan terms, with 84-month financing becoming more common, which increases total interest costs and elevates negative equity risk for both borrowers and lenders.

For investors, the health of CAF is a crucial variable. While its performance has been stable, the systemic risk in the auto loan market is undeniable. Any sign of deterioration in CAF’s portfolio quality or a significant increase in loan loss provisions could further impact CarMax’s already pressured bottom line. The December 18th call will provide a vital update on how CAF is navigating this high-risk environment and its strategy for balancing loan origination with prudent underwriting.

The upcoming earnings report is therefore far more than a simple accounting of the past three months. It is the first chapter in a new story for CarMax, one that will be defined by its ability to adapt to a challenging market, execute a strategic turnaround under new leadership, and safeguard the financial bedrock of its business. Investors, competitors, and consumers will all be watching to see if the former revolutionary can reinvent itself once more.