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Rebound in new car sales set to help used car king, CarMax, too

Co-founder and former CEO of CarMax Inc., Austin Ligon addresses the second session of Democratic National Convention in Charlotte, North Ca
Co-founder and former CEO of CarMax Inc., Austin Ligon addresses the second session of Democratic National Convention in Charlotte, North Ca

(Reuters) - CarMax's parking lots are much emptier than the company, the nation's largest used car dealer, would like.

CarMax specializes in cars that are one to four years old. And one to four years ago, the credit crisis was crimping sales of new cars, causing the supply of used cars to fall at a time when owners would normally be trading up to newer models

As a result, CarMax has had to pay more for used cars.

But now, with sales of new autos expected to rise 40 percent, that is about to change and new inventory will roll in just in time for the impending car buying spree, Barron's says. The average passenger car is 11.1 years old and ready for replacement.

Barron's says, as a result, the stock could gain another 20 percent in the year ahead. Carmax shares closed 4.2 percent higher on Friday at $32.55.

(Reporting By Michelle Conlin; Editing by Theodore d'Afflisio)

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