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Auto dealers Carvana, Sonic Automotive plunge in broad selloff
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Rising rates, low confidence makes consumers wary of spending
Already shaky market sentiment took a gut punch on Thursday, after used-car dealer CarMax Inc.’s latest quarterly results laid bare the plight of US consumers stuck between high inflation and climbing interest rates.
CarMax’s fiscal second-quarter numbers failed to meet Wall Street’s expectations on nearly every metric. The company said the ability of potential buyers to afford vehicles has become a challenge, with rising interest rates and low consumer confidence adding further wrinkles.
The results sparked a steep selloff in CarMax shares, and weighed heavily on the stocks of its peers, as well as auto manufacturers and suppliers. CarMax closed down 25% at $65.16 Thursday, marking the biggest daily plunge in over 22 years. Peers, including Carvana Co. and Sonic Automotive Inc., also tumbled.