Jon Daniels: Sure. Yes, I’ll take them in order. So, credit availability for CarMax again, I think this is one of the values of having the multitude of lenders that we have. We really continue to provide our customers with great access to credit. Now, I think it’s not surprised in the industry that obviously lenders are always looking to shore up their portfolios and they’ve tightened where they’ve needed to. We’ve seen most of our tightening from our partners if you will, probably the back half of last calendar year. CAF has tightened over the course of the year and I think that’s just standard lending practices that you’re going to find right now. But ultimately I think we provide fantastic access to credit certainly in the high 90% range from a mid to over and probably 95% approval rate to customers when they apply.
And again, I think we give them access, to see other vehicles that are available to them. Regarding overall performance in the quarter for CAF in particular, we continue to look at our overall portfolio. I’m going to look at this from the lens of our Tier 1 business. We securitize everything. We report on that on a monthly basis, how that’s performing. If you really look at the older deals that you might compare the newer deals to the 2017, the 2018, the 2019, even the 2020 deals, exceptionally low loss rates, well below the 2% to 2.5% range they’re trending towards right now and obviously for all the reasons that we’ve cited before, access to cash, government stimulus, all that, so they really outperformed. What we’re seeing currently in the newer vintages is really highly expected.
It’s just a reversion back to sort of the normalized levels that the industry has seen from a lending perspective. So we are — we were anticipating the 2021 to 2022 deals to go back to that 2% to 2.5% range. I would tell you we’re seeing with these higher monthly payments we’re probably at the higher portion of that range and that’s why we’ve done the tightening that we’ve done. We’ve done it over the course of the last year to some degree in Tier 3, and also pockets in Tier 1 where we see opportunity to pull back. We want to make sure we operate well within that 2% to 2.5% range and I think we’ve done a nice job there. So ultimately, as you think about the provision going forward, it’s a combination of several things I cited in the prepared remarks.
The existing portfolio, which again yes, I think we have a good handle on, I think it’s going to operate in that 2% to 2.5% range and we’ve done a nice job there. You’ve got the new originations, which are certainly going to come in lower, given the tightening. We’ve pulled back to some degree on the Tier 3. It’s a small portion of our business and the Tier 2, we’re excited about that space and we see great opportunity. So if you put all that together I think our reserve speaks for itself. We’ve come from a 311 to a 308. I think it’s relatively stable. We think we’re well reserved and we’ll see how the consumer performs, but I think we’re in a good spot right now.
Michael Montani: Thank you.
Operator: Our next question will come from John Murphy with Bank of America. Your line is open.
John Murphy: Good morning, guys. I just wanted to ask Bill, as you go through periods of steep depreciation, like you’re talking about, and we’ve seen in the used car market on pricing, typically they’re accompanied by supply increases, which would drive same-store sales higher. I’m just curious what you’re seeing, in the market right now as far as availability and flow of vehicles, maybe in the 0 to 6 year old bucket, which is the target, and then maybe in the 6 to 10 year old, which is a growing target for you over time?
Bill Nash: Yes, good morning, John. When I think — look back at the depreciation for the quarter, like I said, there was steep depreciation in June and July and quite honestly it started in May. So if you look at May, June and July, there was probably about $3,000 of depreciation, which is absolutely it’s steep. And the biggest impact it has on us obviously is really more on the buys, because we’re going to adjust accordingly and consumers are always thinking that their vehicles are worth more, so it impacts the buys early on until the rest of the market shifts. So from a buy standpoint, it’s a headwind in the short-term. But again, I think the team did a phenomenal job not only maintaining the retail margins, but the wholesale margins, which we haven’t talked about because year-over-year they were up even in this steep environment.
As far as availability, look, if you’re having to rely on outside sources, there’s just, it’s a, there’s a limited supply. And if I think back over at least my tenure here at CarMax, there’s just less vehicles available through third party auctions and it’s been that way for a while. So, and I don’t foresee that changing greatly in the near-term, which is also why we’re thrilled to have our self-sufficiency so high and we’re continuing to look for avenues to continue to source inventory really retail or wholesale, however we can outside of those sources.
John Murphy: And maybe just a followup, I mean, do you think you could ever get meaningfully above that 70% self-sufficiency that you’re at right now, which is pretty damn good to start with, but I mean, are there other avenues maybe through Edmunds or other ways that you could increase that meaningfully?
