By all accounts, Warren Buffett and Eddie Lampert are two of the smartest fellas in Investing-land. Yet right about now, it's looking like Berkshire Hathaway's (NYSE:BRK-B) boss and Sears Holdings' (NASDAQ:SHLD) head have bought themselves a couple of lemons.

Buffett's pick, CarMax (NYSE:KMX), crashed and burned last week. And while Lampert avoided that particular trainwreck, his investment in AutoNation (NYSE:AN) isn't working out much better -- in fact, it's expected to post yet another decline in profits when it reports late next month. Meanwhile, the redheaded stepchild of the used-car industry, America's Car-Mart (NASDAQ:CRMT), is gunning the motor and breaking speed limits once again.

Car-Mart on cruise control
It seems that back-to-back earnings beats and back-to-back increases in year-over-year profits earlier this year weren't enough for Car-Mart. On Thursday, the used-car salesman ended its fiscal year with a three-peat, reporting:

  • 29.1% growth in Q4 sales, with comps coming in at 30.3% (and no, I didn't get those numbers backwards),
  • on which Car-Mart earned $0.51 per share -- triple its fiscal Q4 2007 profit.

Car-Mart's news stands in marked contrast to CarMax's report earlier this month. Whereas CarMax sold nearly 5% more cars in its fiscal Q1, but recorded only 3% better revenue, Car-Mart sold 25% more units, growing its sales 29%.

But Car-Mart isn't just selling a lot more cars this year than last. It's also charging higher prices. The average Car-Mart jalopy sold for $8,989 last quarter -- more than 7% higher than a year ago. In contrast, CarMax's more upscale customers are sitting on their wallets. The average used-car sale at CarMax rang in at $16,852 last quarter -- nearly twice the price of a Car-Mart ride, but down nearly 4% year over year.

A tale of two car salesmen
So why isn't Car-Mart suffering from the devastating 25% drop in resale value on trucks and SUVs? It may well be -- but it may depend less on such big-ticket items than CarMax does. As CEO Hank Henderson put it: "Although we are not immune to the current difficult macro environment, we are not as directly affected as most retailers [because] we sell basic transportation."

Moral of the story: If you need a car, you need a car. But if you're also strapped for cash, you may want to skip the $16,852-mobile when an $8,989 beater will get the job done.

Read along as Car-Mart digs itself out of the ditch it drove into: