CarMax vs. Carvana: A Comparison of Fiscal 2025 First-Quarter Earnings

Why CarMax is a Better Bet Than Carvana

CarMax and Carvana are two major players in the used car market, but when it comes to long-term stability and profitability, CarMax is the clear winner. Despite a tough start to its fiscal year, CarMax remains a well-known, large, and profitable business. Here’s why CarMax is a better bet than Carvana:

1. Established Reputation

CarMax has been a giant in the used car market for years, with a strong reputation for quality and reliability. Customers trust CarMax for their car-buying needs, which gives the company a competitive edge over newer players like Carvana.

2. Profitability

While CarMax’s first-quarter earnings fell year over year, the company still delivered a gross profit per retail unit sold of $2,347 and record extended protection plan sales of $563 per unit. In contrast, Carvana is still deep in the red, with one-time gains masking its true financial health.

3. Stability

CarMax has weathered economic ups and downs, proving its resilience in all manner of economic conditions. In comparison, Carvana is still a work in progress, rebuilding its business after overextending itself during the pandemic. Investors looking for stability and long-term growth potential may find CarMax a more attractive option.

4. Industry Experience

With around 18,000 dealers in the highly fragmented used car market, CarMax’s industry experience and expertise give it a competitive advantage over newer entrants like Carvana. CarMax knows the ins and outs of the market and has built a solid foundation for future growth.

Overall, while Carvana may be making headlines with its rapid growth, CarMax remains the better choice for investors looking for a stable, profitable, and established player in the used car market. With its strong reputation, profitability, stability, and industry experience, CarMax is a better bet than Carvana in the long run.