CarMax Auto Finance originations down 1.5%

CarMax Auto Finance ’s originations declined in the fourth quarter of fiscal 2026 as the retailer is eyeing improving performance under new leadership. The retailer’s net loans originated tallied $1.9 billion, down 1.5% year over year , in the quarter ended Feb. 28, according to CarMax’s April 14 earnings release. For the full year, originations totaled $8 billion, down 3.2% YoY. Outstandings landed at $16.4 billion, down 7.2% YoY, in Q4 and dipped 3% YoY to $17.2 billion for the full year. Net interest margin across CarMax Auto Finance (CAF)’s book was 6.3%, up 10 basis points (bps) YoY. The weighted average contract rate was stable at 11.1%. CAF’s net penetration rate in Q1 was 42.8% compared with 42.3% a year prior. For the full year, the penetration rate was 42.4%, up 30 bps YoY. Penetration rate prior to the impact of three-day payoffs across tiers was as follows in Q4, according to the release: CAF: 45.3%, up 100 bps YoY; Tier 2 (third parties who pay CAF a fee or to whom CAF does not pay a fee): 15.8%, down 180 bps YoY; Tier 3 (third parties to whom CAF pays a fee): 9.8%, up 190 bps YoY; and Other (including consumers using their own financing and cash purchases): 29.1%, down 110 bps YoY “The year-over-year increase in CAF penetration in the fourth quarter reflects our continued focus on expanding in Tier 2, supported by our flexible funding strategy and newest underwriting models,” Jon Daniels , senior vice president, said during the company’s earnings call. The allowance for loan losses totaled $453 million in Q4, or a coverage ratio of 2.8%, up 30 bps YoY, according to the release. Due to a decrease in total interest margin tied to a decrease in auto loans outstanding following a $900 million nonprime securitization in the third quarter of 2025, CAF’s income declined 9.8% YoY to $143.7 million, according to the release. Full-year income totaled $562.7 million, down 3.3% YoY. Sales stable CarMax’s used vehicle retail sales inched down 0.8% YoY to 181,188 units in Q4 and decreased 1.1% YoY for the full year to 780,684 units, according to the release. Sales improved compared with larger declines in the second and third quarters of 6.3% YoY and 9% YoY, respectively, Enrique Mayor-Mora , executive vice president and chief financial officer, said during the call. The average selling price for a used vehicle was $26,019 for the quarter, down 0.4% YoY, and declined 0.6% YoY for the full year to $26,121, according to the release. Gross profit per unit was $2,115 in Q4, down 8.9% YoY, and was $2,253 for the full year, down 2.5% YoY. CarMax purchased 229,000 vehicles from consumers in the quarter, up 2.5% YoY, and bought 41,000 cars from dealers, down 9.5% YoY. The retailer, in evaluating inventory needs and affordability, will “continue to assess what is the right level of inventory, what is the right age of inventory and the price points,” Mayor-Mora said. New CEO names 3 priorities Meanwhile, newly named President and Chief Executive Keith Barr outlined three efforts CarMax is undertaking to “drive better performance” during the call: Offering competitive pricing and a broad vehicle selection; Use technology, software, data and AI to “make it even easier for customers to buy and sell cars;” and Act with “urgency and intention” to align the organization, “change what is not working, double down on what is and keep evaluating opportunities and risks as we move.” Barr became in February, succeeding William Nash . Shares of CarMax [NYSE: KMX] were $41.66 at market close today, down 15.1% from market open. CarMax has a market cap of $5.9 billion. Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with Auto Finance Summit East and Auto Finance Capital Summit in May. To see event agendas and register, visit autofinance.live .

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