Sept 29 (Reuters) - Used-car retailer CarMax Inc
said on Thursday that an uncertain economic environment was
starting to take a toll on vehicle demand, sending ripples
through the auto sector, which has largely dodged a significant
hit from inflation this year.
CarMax shares tumbled 22% to $66.63 to hit a more than
two-year low, after the company reported second-quarter results
below analysts' estimates and underscored the impact of
inflation and rising interest rates on car sales.
"Obviously, consumers are having to make decisions ... I
just think they are prioritizing their spend a little
differently," Chief Executive Officer William Nash told
analysts, adding that softness in used-car sales continued in
Strong demand for personal transport amid inventory
shortages has allowed automakers and retailers to pass on higher
costs to customers, largely protecting profitability this year.
But analysts have been warning that the industry will soon
feel the pinch of rising interest rates and weakening consumer
confidence as inventory shortages send car prices to record
Auto research firm Cox Automotive, which tracks U.S. vehicle
market trends, cut its forecast for new and used vehicle sales
on Wednesday, citing worsening consumer sentiment, while Moody's
changed its outlook for the global Automotive industry to
"negative" from "stable" earlier in the day.
The outlook change is driven by a weakening macroeconomic
environment and concerns over affordability, Moody's analysts
wrote in a note.
CarMax's dour comments and disappointing results heaped more
pain on the auto sector, which has been reeling from a broader
Shares of General Motors Co and Ford Motor Co
were down about 5% in morning trade, while those of auto dealers
AutoNation Inc, Lithia & Driveway and Group 1
Automotive fell between 7% and 10%.
(Reporting by Priyamvada C in Bengaluru and additional
reporting by Joseph White in Detroit; Editing by Anil D'Silva)