For more than a month, we've heard a worrying sound pinging around somewhere in CarMax's (NYSE:KMX) innards. At first, we thought it was just the noise from same-store sales dropping 17% in June and July, but when we popped the hood this week, it turned out that unit comps for used cars were down that much for the whole dang quarter.

Sure, new-store growth pared the companywide unit decline to just 7%, but the falling value of cars sold pushed the revenue decline to 13%. When all was said and done, CarMax slammed the door on a near-80% decline in profits -- just $0.06 per share. Granted, the bulk of this decline was attributable to the loss of $7.1 million in CarMax's finance arm (compared to a profit of $33.4 million last year), which has been stung by the same credit crisis that sank Bear Stearns and Lehman, and nearly wrecked AIG (NYSE:AIG). Whatever the cause, the decline still stings.

And that's not the worst of it
Back when times were good, CarMax CEO Tom Folliard promised to pass along to consumers the bulk of savings wrung from its business model. His goal: Trade short-term profits for long-term market share dominance. But Folliard fessed up Monday to the sad fact that things aren't working out quite as well as planned: "Through July ... our market share in the late-model used vehicle market declined slightly," he said.

This injury might not smart quite as bad as it does, except for the fact that less "altruistic" rivals, such as AutoNation (NYSE:AN), Penske Automotive (NYSE:PAG), and especially America's Car-Mart (NASDAQ:CRMT), aren't hurting nearly as bad as CarMax is.

Grasping at straws
With bad news predominating, CarMax fumbled for something good to say about itself, coming up with just a couple of straws' worth of happy news. First, last quarter's SUV fire sale helped boost sequential prices on used cars sold. Second, CarMax's wholesale business boosted gross profit margins. According to CarMax, consumers are turning to "older, higher mileage vehicles ... [and] demand for these types of vehicles is particularly strong from dealers who specialize in selling to credit-challenged customers."

Foolish final thought
Specializing in high-quality, late-model used cars, this trend is clearly doing CarMax no favors. But here's something Ford (NYSE:F) and General Motors (NYSE:GM) bulls might want to consider: A trend toward buying clunkers bodes ill for new car sales as well.

Over at Motley Fool Inside Value, our equity grease monkeys are fine-tuning their valuation on CarMax based on the latest numbers. What's their take on the quarter? Take our newsletter for a spin on our dime -- 30 days free -- and find out. 

Fool contributor Rich Smith owns shares of CarMax, and because turnabout is fair play, CarMax now owns Rich's truck. The old girl failed emissions inspection one time too often, and he traded her in to the used-car superstore. The price? "Entirely fair," says Rich. CarMax is an Inside Value recommendation. The Motley Fool has a disclosure policy.