Compare used-car retailers such as Carvana and CarMax with dealer groups such as AutoNation and Lithia by looking beyond sales growth. Their businesses overlap, but differ in vehicle mix, financing, wholesale operations, after-sales income, costs and capital needs. Start with comparable operating measures, then compare valuation using market data from the same date. The fiscal 2025 figures below illustrate the framework; they are not a current stock ranking.
Start with what each company actually does
“Used-car retailer” and “traditional auto retailer” are not opposites. Dealer groups sell used vehicles too, while used-focused companies may earn money from wholesale sales, financing and complementary products. Classify each business by its reported operations rather than its label.
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- Carvana: an online-led retailer whose vehicle sales connect to financing, complementary products and trade-ins, supported by acquisition, reconditioning, logistics, technology and fulfillment operations.
- CarMax: a used-auto retailer with retail, wholesale and auto-financing businesses; customers can transact online and in stores across more than 255 locations, according to its company overview accessed in 2026. Use its latest filing for current financial and operating measures. CarMax company overview
- AutoNation: a diversified dealer group that reports new and used vehicle sales, financing, parts and maintenance, plus operations including collision centers, auctions, parts distribution, mobile repair and an auto finance company.
- Lithia Motors: a dealer group operating in the United States, United Kingdom and Canada, with new and used vehicle, finance and insurance (F&I), and repair and maintenance activities.
Company filings are the primary source for each business’s segment definitions and results. For comparisons, use filings for the same fiscal period where possible; fiscal-year figures are not a synchronized snapshot of current stock prices or quarterly performance.
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Retail unit sales help show customer demand and operating scale, but a unit is not a uniform dollar of profit. Check how each company defines a retail unit, whether its measure includes marketplace or partner vehicles, how it treats returns, and whether acquisitions or store openings affect growth.
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Carvana’s 2025 Form 10-K defines retail units sold as vehicles sold to customers in the period, including retail marketplace partner vehicles and net of returns under its seven-day return policy. It reported 596,641 retail units in fiscal 2025, up from 416,348 in 2024. Those are company-reported annual figures, not a marketwide measure. Carvana 2025 Form 10-K
For each company, put unit growth beside comparable-store sales, average selling prices and gross profit. Note whether the reported period includes acquired locations or other changes in the sales channel. A retailer can sell more vehicles while facing lower per-unit economics or higher operating costs.
Separate vehicle gross profit from total gross profit per unit
Per-unit gross profit (GPU) is useful only when the numerator covers comparable revenue streams and the denominator uses a comparable unit definition. Do not compare one company’s vehicle-only GPU with another’s total GPU as if they measure the same thing.
Rank #2
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| Carvana measure | Fiscal 2025 | Fiscal 2024 | What it represents |
|---|---|---|---|
| Retail vehicle gross profit per unit | $3,315 | $3,312 | Vehicle gross profit per retail unit, as separately reported by Carvana. |
| Total gross profit per unit | $7,026 | $6,908 | Company-reported total GPU, which includes gross profit from multiple streams, not vehicle-only profit. |
These are Carvana’s company-defined figures in its fiscal 2025 Form 10-K. The gap between them is a practical reminder to inspect what a peer’s GPU includes, especially financing, wholesale and complementary products. Carvana 2025 Form 10-K
Read revenue mix alongside gross profit and operating costs
Revenue indicates the scale of a business line, not how much it contributes to earnings. Compare segment gross profit, operating income and the expenses needed to generate them—not sales dollars alone.
In fiscal 2025, AutoNation reported that new vehicles represented 49% of total revenue but 13% of total gross profit. That difference shows why a company with substantial vehicle sales may have a very different profit mix. AutoNation 2025 Form 10-K
Rank #3
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Lithia reported $37.635 billion in total fiscal 2025 revenue, including $18.703 billion from new vehicles, $13.372 billion from used vehicles, $1.474 billion from F&I and $4.087 billion from aftersales. These are revenue categories, not profit contributions; evaluate their margins and associated costs before drawing conclusions about earnings quality. Lithia Motors 2025 Form 10-K
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After-sales work such as parts, maintenance and repair can provide a distinct earnings stream from vehicle sales. Check how each company defines and reports those activities rather than assuming the categories are directly comparable.
Examine financing, wholesale and inventory risks
Retail sales can support more than vehicle revenue. Carvana reported $14.5 billion of retail vehicle sales, $4.1 billion of wholesale sales and revenues, and $1.7 billion of other sales and revenues in fiscal 2025. Its filing describes the latter primarily as gains on sales of originated finance receivables and commissions on complementary products. The categories make clear why vehicle revenue alone does not capture its business economics. Carvana 2025 Form 10-K
Rank #4
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For each retailer, inspect whether financing profit comes from originating and selling loans, holding receivables and collecting income, or selling warranties and other products. Loan-sale gains and retained-loan income have different timing and credit exposure. Check loan performance, funding costs, cash flows and the sensitivity of results to credit and interest-rate conditions.
Wholesale activity, trade-ins and direct vehicle acquisition also matter. Compare inventory levels, days supply, aging and markdowns, along with the costs of reconditioning and moving vehicles. Changes in used-vehicle prices can affect acquisition costs and resale prices at different times, so a period’s margin may reflect inventory bought under earlier conditions.
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Compare costs, capital needs and resilience
A retailer’s operating model shapes its cost base: centralized fulfillment and logistics differ from a broad physical dealership footprint. Compare the costs and capital behind each model rather than treating scale as an automatic advantage.
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- Operating costs: Review selling, general and administrative expense (SG&A), including its level per unit and as a share of gross profit where the company reports comparable measures. Include reconditioning, logistics and fixed costs.
- Debt and leases: Examine interest expense, debt balances and maturities, lease obligations, liquidity and financing access.
- Cash generation: Compare operating cash flow and free cash flow over a consistent period, noting working-capital changes and one-time items.
- Inventory and receivables: Assess inventory value and turnover as well as the credit performance and funding needs of any loan portfolio.
- Execution and dilution: Review whether growth requires substantial investment and whether share issuance changes existing shareholders’ claims.
In its fiscal 2025 filing, Lithia said same-store new- and used-vehicle retail gross profit declined as gross profit per unit normalized toward pre-pandemic levels. It also cited higher SG&A as a share of gross profit and a higher effective tax rate as contributors to lower net income, partly offset by lower interest expense. This is management’s explanation of its results, not an independent test of causation. Lithia Motors 2025 Form 10-K
Make valuation comparisons on one date and one basis
Operating comparisons do not establish which stock is cheaper. To compare valuation, first use share prices, share counts and enterprise values from a common date, then calculate measures on consistent financial periods and accounting bases.
- Enterprise value to EBITDA: Define debt, cash, leases and EBITDA consistently across companies; identify adjusted figures and excluded items.
- Price to earnings: Use only when earnings are positive and sufficiently comparable. Explain material differences in accounting or one-time items.
- Free-cash-flow yield: Use the same period and treatment of leases, debt and exceptional items for numerator and market value.
- Shareholder claims: Consider dilution, buybacks and debt maturities alongside headline multiples.
The fiscal 2025 examples here do not provide a synchronized set of current stock prices, quarterly results or valuation multiples. Refresh market and filing data before making a time-sensitive comparison; these examples cannot identify a current valuation winner or predict returns.
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- Choose a common period. Align fiscal years or quarters and identify geography, currency and any acquisitions or other changes that affect the figures.
- Map the businesses. Record each company’s retail, wholesale, finance, F&I and after-sales operations using its own filings.
- Standardize operating measures. Compare units, comparable-store sales and selling prices, then distinguish vehicle-only GPU from total GPU and document what each includes.
- Trace earnings quality. Compare gross profit contribution, operating income and cash flow with revenue; inspect loan economics, inventory risk and operating costs.
- Assess the balance sheet. Review debt, leases, liquidity, maturities, inventory and credit exposures.
- Value the shares consistently. Use market data from one date and comparable definitions for enterprise value, EBITDA, earnings and free cash flow.
This sequence helps explain why two retailers with similar unit growth—or very different reported revenue—can have different earnings drivers and risks. It supports an informed comparison, not individualized investment advice.
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