Carmax inventory is starting to slide, but don't panic... yet
At the end of November heading into the year's end, car buying season is heating up.
As we covered before, Carmax ($NYSE:KMX) tends to have low inventory and high average car prices in March and August. The converse is true during the holiday season; inventory peaks in November and December year-over-year with year-end sales events and other consumer-friendly buying incentives sweeping the nation.
Over the past week, however, a new trend emerged when looking at the number of cars listed on Carmax.
From November 22 to November 26, inventory at Carmax dropped 6.33%. A similar negative trend is also present at other online car buying websites: both Cars.com ($NYSE:CARS) and have slighter, yet noticeable, recent dips in their inventory after recent peaks.
With all eyes on the automotive industry after President Trump's threat of car import tariffs on China and several plant closures from General Motors ($NYSE:GM), a drop in inventory during a normally busy season should raise some alarms.
But of course, historical trends can help put this into perspective. In 2015, 2016, and 2017, there was a dip in car inventory around Thanksgiving at Carmax similar to the dip today. And, in the past three years, inventory bounced back —relatively speaking — and continued to climb for one last peak before the new year.
Only time will tell if this year's drop is just another regular dip, or a sign of major concern for an industry on edge. For now, we'll keep a close eye on general inventory trends, as well as lookahead data to see how many cars are getting taken off the lot.