A customer looks at a Ford F-150 pickup truck at a CarMax dealership in Brandywine, Md. Hasan Sarbakhshian | Getty Images Negative subprime auto data from CarMax's earnings is bad news for regional banks, according to investment firm Piper Jaffray. "CarMax is the largest used car dealer in the country, we believe these developments indicate we will continue to see more pressure on used car prices in the coming months," Piper Jaffray's Kevin Barker wrote in a note to clients Tuesday. He added, "The decline in sales from lower tier borrowers (near-prime to subprime) are a clear signal the market recognizes subprime lending may have been overextended. These developments continue to confirm our thesis that lower used car prices and lower auto sales will pressure earnings/revenue for banks most exposed to the auto sector, in particular" Huntington Bancshares, Wells Fargo and BB&T.
CarMax, the largest used car dealer in the US, has revealed negative subprime auto data in its earnings, which could be a problem for banks, says Kevin Barker, adding this indicates that "we will continue to see more pressure on used car prices in the coming months" and its "a clear signal the market recognises subprime lending may have been overextended".