Carma Limited surged past prior year sales with total units sold up 133% to 1,848, driving revenue growth of 84% to $34.2 million in Q4 FY2026. Operational efficiency hit new highs despite softer market conditions, positioning the company well for FY2027.
- Total units sold up 133% year-on-year to 1,848
- Revenue increased 84% to $34.2 million
- Reconditioning productivity exceeds prospectus forecast by 10%
- Vehicle purchases up 157% to 2,202 units
- Operating cash outflow driven by $10.7 million inventory build
Record Quarterly Sales Amid Challenging Market
Carma Limited (ASX:CMA) delivered its strongest quarter yet in Q4 FY2026, with total units sold soaring 133% year-on-year to 1,848 vehicles. Retail sales alone topped 1,000 units for the first time, climbing 112% to 1,003. This surge propelled revenue to $34.2 million, an 84% increase compared to the prior corresponding period. Despite these gains, the used car market faced headwinds from geopolitical tensions in Iran, volatile fuel prices, and broader macroeconomic pressures that softened demand and led to dealer price reductions.
Operational Efficiency Breaks New Ground
Carma’s operational muscle was on full display, with average retail units reconditioned per shift hitting 21.7; a 155% jump on the prior year and 10% ahead of the company’s own prospectus forecast. This record throughput was driven by a steady flow of vehicles from the expanding Sell-to Carma network, which grew to nine centres with the addition of a new location in Wollongong. Total vehicle purchases surged 157% to 2,202 units, underpinning the company’s ability to scale reconditioning and sales volumes.
Margins Under Pressure but Underlying Profitability Holds
Gross profit rose 81% to $2.8 million, reflecting the strong sales volume. However, gross profit per retail unit slipped 14% to $2,800, primarily due to softer wholesale conditions and an increase in vehicles held longer amid a slowing market. Carma’s online inventory days expanded to 52 from 37 forecasted, meaning more stock was sold into weaker market conditions, compressing margins. Encouragingly, vehicles sold within 30 days of listing generated a record retail gross profit of $3,200 per unit, signalling operational improvements are cushioning the impact of market softness.
Inventory Build and Cash Flow Dynamics
The company’s vehicle inventory swelled by $10.3 million to $32.1 million, funded largely from cash reserves, which contributed to a net operating cash outflow of $16.6 million for the quarter. Excluding the inventory build, operating cash outflow was $5.9 million. Carma ended the quarter with $16.0 million in cash and $25.3 million in unused financing facilities, providing $41.3 million in available funding. Notably, the company chose not to draw on its $30 million bailment finance facility to fund inventory, opting instead to use cash on hand.
FY2026 Performance Versus Prospectus Forecast
For the full financial year, Carma’s reconditioning productivity outperformed its prospectus forecast by 4%, averaging 15.1 retail vehicles reconditioned per shift against a forecast of 14.5. However, retail units sold finished 6% below forecast at 3,156, reflecting the market slowdown. The retail average selling price was 10% lower than forecast, influenced by a strategic shift towards sourcing older vehicles through the Sell-to Carma channel, which carry lower prices but allow Carma to add value through reconditioning. Vehicle inventory at year-end exceeded the prospectus forecast by $7.1 million, partly explaining the cash flow variances.
Positioning for Growth in FY2027
Carma’s strong exit run-rate in reconditioning and expanded inventory position the company well to navigate ongoing market headwinds and capitalize on growth opportunities in FY2027. The company’s focus on operational efficiency and network expansion continues to underpin its strategy to be a leading destination for quality used cars in Australia.
Bottom Line?
Carma’s record operational productivity and network growth provide a solid foundation, but recovering margins and managing inventory turnover will be key challenges as market conditions evolve.
Questions in the middle?
- Will Carma sustain its reconditioning efficiency gains amid fluctuating used car demand?
- How will the company manage inventory levels to avoid margin erosion if market softness persists?
- What impact will the strategic shift towards older vehicles have on long-term profitability?