Oct. 2--Automotive retailer CarMax Inc. is laying off 610 employees nationwide, or about 4 percent of its work force, because of slowing sales.

The layoffs include 15 workers at its two stores in the Richmond area.

The cuts will take place in the reconditioning departments at 60 of its 99 stores, said Trina Lee, a spokeswoman for the Goochland County-based company.

Those are the stores that do reconditioning, such as paint and mechanical work, for vehicles that will go on the sales lot.

About one-third of the cuts were a direct result of a slowdown in sales at stores, Lee said. The company reported a 17 percent drop in same-store sales, or sales at stores open at least a year, in the second quarter that ended Aug 31.

The rest were a result of an ongoing effort by the company to cut costs by adjusting its staffing, Lee said.

In the past several months CarMax has reduced hours worked at its stores and is allowing attrition to reduce staff. Last week it announced a hiring freeze at its Goochland headquarters.

The 610 employees, who were notified yesterday, will be offered severance, but Lee could not say how much each would receive. Instead, she said the company would incur about $7 million in severance costs to its third-quarter expenses.

CarMax employs 15,249 nationwide with about 1,150 workers at its two Richmond-area stores and headquarters.

"This was a difficult but necessary decision for us to make," Tom Folliard, CarMax's president and chief executive, said in a statement.

Lee said she did not anticipate further cuts.

George Hoffer, a professor of economics at Virginia Commonwealth University who specializes in the automobile industry, said yesterday that cutting employees in its reconditioning department sends a signal that it intends to keep inventories low.

"In essence [the layoffs] means they don't expect they're going to turn things around anytime soon," he said.

CarMax announced last week it had cut its used-car inventory by 13,300 vehicles to save $200 million. The chain reported earnings for the fiscal second quarter fell 78 percent compared with the same period a year ago.

Industrywide, the automobile business is seeing sales fall. Manufacturers yesterday reported double-digit declines in September.

Hoffer blamed the sales drop on uncertainty in the economy as the government works on a bailout of banks and tightening credit standards.

"In the 40 years I've studied the automobile business, I have never seen sales come to a grinding halt like this," he said.

Shares of CarMax fell 64 cents, or 4.57 percent, to close at $13.36 on the New York Stock Exchange yesterday. Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com.

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