Dive Brief:
- CarMax expects its AI and technology investments will help drive at least $150 million in cost savings over the next 18 months, executives said during the company’s Q2 2026 earnings call last week.
- Current AI projects enhance customer experience and improve efficiency, according to EVP and CFO Enrique Mayor-Mora, pointing to the AI-powered virtual assistant Skye and the agentic version Skye 2.0. Tech investments are improving the company’s ability to retire legacy systems and lower licensing usage by eliminating certain features or reducing the number of seats. Teams are also using AI to review third-party contracts more frequently.
- “The investments in technology, systems and processes that we have made as part of our omni transformation will allow us to substantially reduce spend,” said Mayor-Mora. “There is a portion of these savings … that we do expect to direct back to investments that have a direct tie with sales.”
Dive Insight:
The focus on cost savings and related technology initiatives comes as CarMax exits a challenging quarter, as noted by CEO Bill Nash.
During Q2, CarMax saw total sales decline 6% compared to last year and total unit sales drop 5.4%.
“While our second quarter results fell short of our expectations, we remain focused on driving sales, gaining market share and delivering significant year-over-year earnings growth for years to come,” Nash said during the call. “The focus as we go forward is to continue to be as nimble as possible because it’s an aggressive environment out there.”
Carmakers and sellers have had to navigate the financial strains of tariffs and consumer spending slowdowns this year, often turning to technology as a critical lever in alleviating pressure.
Some key generative AI use cases include deploying the technology within advanced driver assistance systems, customer support, simulations, supply chain, software development and predictive maintenance and diagnostics, according to an IBM report published in July. Earlier in the year, IBM found nearly two-thirds of auto industry leaders have a clear approach to integrating AI into their long-term innovation strategy, based on a survey of 100-plus automotive executives.
After strengthening its IT and data foundation, CarMax has been able to leverage the latest AI technologies across various use cases with different levels of maturity. Employee-facing efforts include the deployment of Microsoft’s 365 Copilot and other AI coding apps.
As part of the work, executives have kept an eye on potential platform fragmentation and aim to consolidate platforms where possible.
“It’s important to remember that we had been in investment mode as we transformed our company into an omni retailer,” Mayor-Mora said. “Once you’re done with that, the next step really is to optimize and then rationalize that spend, and that’s where we are.”
