Oppenheimer analysts provided their review on CarMax, Inc. (NYSE:KMX), noting that used car pricing is set to moderate in 2023.
The past several months proved very challenging for the broader used car retail sector and even, industry-leading CarMax, as a combination of historically elevated used car pricing and waning consumer confidence, particularly amongst core middle-income shoppers, weighed meaningfully upon demand trends in the space.
The company’s management and other leading used car sellers have indicated clearly that historically elevated prices for pre-owned vehicles have meaningfully impacted affordability and hence demand, lately.
Overall, while the analysts remain concerned with prospects for the company and the used car sector, nearer term, they are increasingly optimistic that moderating prices for pre-owned vehicles could help to fuel improved demand and unlock pent-up demand, beginning later in 2023.
In the analysts’ view, while market sentiment toward the used car space is currently quite downbeat, clearer indications of normalizing pricing dynamics could amount to a compelling “positive surprise” for the sector, in the not-too-distant future.