Many investors see CarMax (KMX 2.98%) not only as an independent business but also as a gauge of the overall strength of the auto industry. In particular, the company's emphasis on used cars points to the health of the large segment of the population who choose not to spend up for new vehicles, and that often offers some insight into the state of the consumer economy more broadly. At the same time, the way CarMax has adapted to changing customer attitudes about how best to find and purchase vehicles has a lot to say about what the industry has had to do strategically to keep buyers coming in the door -- or clicking to buy from home.

Coming into Friday's fiscal first-quarter report, CarMax investors had high hopes that the auto dealer would be able to accelerate its growth as the key spring season began. CarMax's numbers were quite encouraging, having bounced back from more sluggish performance recently and signaling continued strength for the industry.

CarMax dealership with large awning and sign and several vehicles on the lot.

Image source: CarMax.

CarMax springs ahead

CarMax's fiscal first-quarter results showed significant growth. Revenue climbed 12% to $5.37 billion, more than doubling its pace of growth from the previous quarter and coming in well ahead of the 7% growth rate that most of those following the stock were expecting. Net income picked up 12% to $266.7 million, and that produced earnings of $1.59 per share, comparing favorably to the $1.47 per share consensus forecast among investors.

The numbers that CarMax put up on the sales front showed that the industry recovered in a major way during the early spring months. Used unit sales in comparable stores were higher by 9.5%, helping to power a 13% rise in total used car units sold. That big boost made sense in light of the comments that CarMax had made in the previous quarter, having said that delays in tax refunds deferred some purchases that otherwise would have happened before the fiscal first quarter began. Yet the auto retailer also pointed to efforts aimed at improving the customer shopping experience, including its omnichannel rollout in limited markets.

CarMax also saw good numbers elsewhere. Wholesale vehicle sales were up 6.6%, as the company bought more of the customer vehicles it appraised. Other sales and revenues were also higher by about 6%, with a double-digit percentage increase in extended protection plan revenue benefiting from favorable conditions throughout the business.

Pricing figures were relatively stable. Used vehicle average selling prices eased lower by 0.1% to $20,050, while selling prices per wholesale vehicle eased higher by 0.2% to $5,213. Gross profit per vehicle was unchanged for used cars but rose about 3% on the wholesale side of the business.

CEO Bill Nash was happy with how the company had done. "CarMax had an outstanding first quarter," Nash said, and he once again pointed to the rollout of its omnichannel sales capacity in the Atlanta market as a driver of growth.

Can CarMax keep picking up speed?

CarMax is optimistic that it's moving in the right direction. Already in early June, the retailer has extended its omnichannel capabilities to most of its markets in Florida, and it opened a customer experience center in Atlanta. Nash remains convinced that "this is truly an unmatched experience that we are confident is the future of car buying."

Investors also kept seeing some of the same tactics that CarMax's management team has used to spur growth. On one hand, expansion of the retailer network continued, with three new stores, two in Texas and one in Memphis. On the other hand, CarMax kept buying back its stock, with $204.8 million in repurchases to buy about 3 million shares.

CarMax shareholders responded positively to the news, and the stock was higher by 5% at midday following the announcement. Changing trends in the auto industry will keep forcing the company to respond, but if it can do as well as it has done in the past, then CarMax should remain a key player in the auto dealer industry for years to come.