With consumers taking full advantage of the Cash for Clunkers program, vehicle retailers began to bolster their bottom-line as cars and trucks started peeling out of the sales lots. Reporting their company’s quarterly performance results before the opening bell on September 22 was car dealership chain CarMax Inc. (KMX), which saw 2Q earnings skyrocket over last year’s same quarter results.

With the government’s $3B in incentives for buyers to trade in their less-fuel efficient vehicles for a higher rated one, retailers like CarMax saw stellar quarterly results. For the recent period, CarMax recorded net income of $103M, or $0.46 per share, blowing away last year’s net earnings of $14M, or $0.06 per share, nearly 7.5x higher year-over-year.

The quarter surge was aided by a $0.10 gain from the CarMax Auto Finance arm (CAF), resulting in an increase in the fair value of retained subordinated bonds. The CAF arm reported net income of $72.1M, a total reverse of last year’s overall loss of $7.1M.

Additionally, overall revenues generated for the quarter climbed more than 13% year-over-year, from $1.84B to $2.08B. Same store sales, those open for at least one year, jumped more than 8% during the period as well.

Analysts, within the industry, were looking for the vehicle retailer to post a quarterly profit of $0.18 per share on overall revenues of $1.77B.

Tom Folliard, President and CEO at CarMax replied to the company’s earnings announcement, “We are pleased to report healthy increases in both used and wholesale vehicle unit sales. In part, the sales growth was the result of easier year-over-year comparisons. However, it also reflected improving customer traffic trends and an improvement in sales execution.”

Although used car sales did not qualify for the Cash for Clunkers program, CarMax did see an improvement in overall on-site tire kickers.

Folliard later commented, “While customer traffic in the second quarter remained slightly below the prior year level, it has steadily strengthened throughout the first half of the current fiscal year. The government’s CARS, or ‘cash for clunkers,’ program resulted in a spike in traffic in late July and August.”

Looking further into the company’s results, CarMax saw used car sales jump 9.6% during the quarter. With used car sales increasing, the bottom-line was influenced by a 5.6% increase in the average selling price.

Adversely, new car sales plunged 18.5% year-over-year, falling from $77.8M a year ago to $63.2M. However, wholesale vehicle sales for the quarter increased to $237M, up more than 6% from last year’s tally of $223.3M.

Contributing to the overall success incurred by CarMax during the period was an increase in gross profit per vehicle sold, which surged more than 13%, to average $2,120 per vehicle. CarMax also witnessed an increase in extended service plans, which jumped 25.7% over last year’s results, and service department sales inched higher, posting an increase of 1.2%.

Further adding to the company’s bottom-line was a decrease in overall expenses, which was reduced by 3.1% during the 2Q for a total of $218.1M. CarMax has focused considerably on the curtailing of expenses during the economic downturn, so much that the company has reduced costs by 9.4% through the first two quarters of the year. The expense cuts have helped the company save nearly $44M.

Through the first six months of CarMax’s fiscal 2009, the company posted net income of $131.7M, or $0.59 per share, compared to the same period a year ago when the company booked a profit of $43.6M, or $0.20 per share.

By the sound of the closing bell on September 22, shares of KMX surged nearly 10%, adding $1.87 to conclude trading at $21.20 per share. Prior to the close, the stock established a new 52-week trading high at $21.46 per share. The stock, over the past year, has also traded as low as $5.76 per share.