CarMax reported last week a spike of almost 10 percent in used-car sales for its first fiscal quarter of 2016 — and much of this increase was driven by younger vehicles, specifically pre-owned units up to 4 years old.

Used unit sales were up 9.3 percent to 150,528 this past quarter, and during the company’s conference call to discuss the quarterly results, management disclosed 76 percent of those vehicles were zero to four years old— also the prime age for certified pre-owned vehicles filling franchised dealers' lots.

This is up from 75 percent the prior quarter, and CarMax management explained it is experiencing an overall shift in supply as units of this age come off-lease in droves.

CarMax president chief executive officer and director Thomas Folliard said during the call, “For the quarter, it was 76 percent (percentage of vehicles sold zero to 4 years old). And you mentioned 75 percent was in the fourth quarter, and that's on top of 73 percent the year prior.

“So I think pre-recession, that number was 85 percent, and then coming out of the recession it was 70 percent. So yes, we've seen some shifting back towards. We've been expecting this with the shifting in supply, with the change in the SAAR. But from quarter to quarter, it was relatively flat from the fourth quarter to this quarter,” he continued.

The industry has been experiencing and is expecting even more of an acceleration in off-lease supply to drive the influx of units of this age.

And many of these units are prime material for automaker’s CPO programs, which are seeing record sales this year.

During the conference call, Folliard was asked whether certified program’s may be beating CarMax to these prime used vehicles since the company's used sales increases aren’t up quite as far as most OEM CPO programs.

Folliard said to get the full picture, one has to look beyond the CPO industry and compare where overall used-vehicle supply is currently compared to years past.

“You can't just look at CPO by itself. You have to look at total comps for the industry. If you look at the average of all the publicly traded new-car dealers, used comps during the first quarter were at 5 percent, so about in line with where we were,” said Folliard. “Within that is where you see the growth in CPO, so there is a distinction there that you have to make.”

Folliard also explained the industry still hasn’t yet seen the full potential of off-lease supply growth, and CarMax is hopeful they will benefit from future results of the current unusually high lease penetration rate.

“Lease percentage right now, I think, in the new car industry is somewhere around 30 percent. And when you see that supply coming back is really two years and three years later after you see a high lease percentage,” said Folliard. “So I'm not sure that we've seen much of it yet, but it's never been a problem for us to source cars.

“And when cars are at a high lease percentage, when you look out two years and three years later, generally, they're more organized at the auction, so it's a little easier for us actually to buy those cars when we see them come back to the marketplace.”

That said, CarMax management reported lease percentage changes in the industry haven’t historically played a large role in the company’s ability to source cars.

“So we actually think it's not a bad thing at all that there's a higher percentage of leases right now. And over the next two years or three years, that'll give us more access to those cars,” Folliard added.

As for what the company will be focusing on over the next 12 months, Folliard in closing broke it down to three factors:

“It's the ability to continuously improve our existing store base, which has gotten quite large, and then our ability to enter new markets successfully, whether they're small markets or medium-sized markets or metro markets, and then to be able to deliver a consumer offer that has all kinds of advantages against the competition that allow us to continue to succeed,” he said.

Folliard said, for him, the most exciting projects on the horizon are “continuing to grow the existing stores and then being able to go after new markets as well.”