CarMax Bets on Buyers With Lower Credit Scores -- WSJ

By Christopher Otts

CarMax, seeking to grow after years of inertia, is aiming to lower car prices by cutting costs while earning more from less creditworthy buyers.

The nation's largest used-car retailer laid out its turnaround strategy under new Chief Executive Keith Barr. CarMax's sales have stagnated since 2021, and its stock price has dropped more than 60% in that period.

Part of its growth strategy: growing the share of "Tier-2" customers, or people below prime but above "subprime" credit ratings, that it finances in-house.

CarMax said this strategy will dent profits in the short term because it will have to book higher reserves for loan losses, but higher-interest-rate loans will be more profitable in the long run.

The company is also doubling down on what it calls hybrid sales: a mix of in-person shopping at brick-and-mortar stores and fully online sales.

The company's main competitor, Carvana, has doubled its business in the last two years, emphasizing a primarily digital model.

CarMax's stock fell over 4% in premarket trading.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

(END) Dow Jones Newswires

November 03, 2026 09:16 ET (14:16 GMT)