Deflation Rocks Used Car Market, Price Bubble Bursts: 5 Stocks Face Margin Squeeze Risks
Portfolio Pulse from Piero Cingari
The U.S. Consumer Price Index (CPI) recorded an annual inflation rate of 3.2% in July, but used car and truck prices fell for the second month in a row, dropping 1.3% after a 0.5% dip in the previous month. This could put downward pressure on the margins and profitability of companies like CarMax, Inc. (KMX), AutoNation, Inc. (AN), Lithia Motors, Inc. (LAD), Carvana Co. (CVNA), and Vroom Inc. (VRM).
August 10, 2023 | 2:33 pm
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NEGATIVE IMPACT
AutoNation, which sells new and used cars, may see its profitability affected by falling used car prices.
AutoNation's business includes the sale of used cars. The recent decline in used car prices could negatively impact the company's profitability.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
Carvana, an e-commerce platform for used vehicles, may face margin squeeze due to falling used car prices.
As an e-commerce platform for used vehicles, Carvana's profitability is directly tied to the price of used cars. The recent decline in used car prices could put pressure on the company's margins.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
CarMax, a leading used car retailer, may face margin squeeze due to falling used car prices.
As a leading used car retailer, CarMax's profitability is directly tied to the price of used cars. The recent decline in used car prices could put pressure on the company's margins.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
Lithia Motors, a significant player in the automotive retail industry, may face margin squeeze due to falling used car prices.
As a significant player in the automotive retail industry, Lithia Motors' profitability is directly tied to the price of used cars. The recent decline in used car prices could put pressure on the company's margins.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
Vroom, an online marketplace for used vehicles, may face margin squeeze due to falling used car prices.
As an online marketplace for used vehicles, Vroom's profitability is directly tied to the price of used cars. The recent decline in used car prices could put pressure on the company's margins.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100