Used car retailers have felt the pressure of high inflation and rising interest rates since last year. While consumer prices rose at the slowest pace last month since May 2021, inflation still remains above the Fed’s comfort zone.
The Fed will likely keep raising interest rates until it achieves its long-term inflation target. This will likely heap more pressure on used car retailers that were already struggling with softening sales and dropping prices. Therefore, it could be wise for investors to avoid fundamentally weak stocks CarMax, Inc. (KMX) and America's Car-Mart, Inc. (CRMT).
