Auto retailer Carmax Inc. (KMX) cut its quarterly profit forecast on Wednesday, sending its shares down more than 11 percent after it cited high gasoline prices as one factor hurting sales.

The Richmond, Va.-based company, the nation's leading specialty retailer of used cars, said rising mortgage interest rates may also be hurting results, and analysts said Carmax may not be the only car dealer feeling the pinch.

Some used car wholesalers have stopped buying large sport utility vehicles because the gas-guzzlers are being shunned by used-car buyers, an Oregon dealer said.

Carmax, which sells both new and used vehicles, estimated that sales of used vehicles at locations open at least a year fell 2 percent to 4 percent in the first quarter, which began March 1, versus prior guidance for growth of 1 percent to 3 percent.

It forecast first-quarter earnings of 30 cents to 32 cents a share, down from a previous forecast of 33 cents to 35 cents. Analysts' average earnings estimate was 34 cents, according to Reuters Research, a unit of Reuters Group Plc.

"The first quarter has been unusually volatile and hard to predict," Austin Ligon, Carmax president and chief executive, said in a statement.

The sales weakness appeared to be market-wide and not specific to Carmax and may have been triggered by the recent rise in mortgage rates as well as higher gas prices, he said.

Less mortgage refinancing activity means consumers have less additional cash available for big-ticket purchases like cars and trucks, he said.

"The first two weeks of April were very slow company-wide; we then saw significant improvement in the second half of the month," he said.

Carmax shares were down $2.81 at $22.19 on the New York Stock Exchange (search) after regaining from an earlier drop of more than 12 percent. Most leading auto dealer group stocks were also lower.

In a conference call with Wall Street analysts, Ligon said Carmax would wait until the end of May before providing any updates on its full-year profit outlook. In March, Carmax said it expected average annual earnings growth of 20 percent and forecast earnings of $1.21 to $1.26 per share for fiscal 2005. The average estimate among Wall Street analysts is $1.22, according to Reuters Research.

On the call Ligon also said "a lot of news focus on skyrocketing gas prices" definitely weighed on auto sales recently, although it added that it was just one factor stirring what he called "short-term volatility."

David Campbell, a retail analyst with Davenport and Co. who follows Carmax stock, noted that industry-wide U.S. auto sales were "not particularly robust" in April. High wholesale car prices, among other factors, could mean that Carmax was not alone in seeing downward pressure on its sales, he said.

Paul Taylor, chief economist with the National Automobile Dealers Association (search), said used car dealers were particularly vulnerable in the current economic environment, amid lingering fears about joblessness despite the U.S. economic recovery.

"Your typical used car buyer has been disproportionately affected by the layoffs over the last two years," Taylor told Reuters.

"Confidence in employment has yet to come back because of the slow rate of employment growth over the past two years. For every potential used car customer that actually is laid off, there are eight potential used car customers that are worried about getting laid off," he said.