CarMax is the United States' largest used-car retailer and a Fortune 500 company. The first CarMax used car auto superstore was opened in September 1993. In the fiscal year ending February 28, 2008, slightly less than 400,000 cars were sold; the company has about 100 locations.
 | |
| Company type | Public (NYSE: KMX) |
|---|---|
| Industry | New and used car retailer |
| Founded | 1993 |
| Headquarters | Richmond, Virginia, USA |
Key people | Thomas J. Folliard CEO , William R.Tiefel, Chairman, Keith Browning, CFO |
| Revenue | $8.20 billion USD |
Number of employees | ~12,000 (2005) |
| Website | carmax.com |
Concepts
The concept for CarMax was developed by Circuit City executives under then-CEO Richard L. Sharp for nearly a year in 1991 using the code name "Project X" and was also known as "Honest Dick's Used Cars" to those intimately involved in the planning.[1] The concept was actually first proposed by a consultant hired by Circuit City to evaluate possible business opportunities beyond the scope of their consumer electronics locations.
While used cars has always been the main business, CarMax purchased the rights to locations from car manufactures such as Chrysler, Jeep, Mitsubishi and Toyota. CarMax also purchased an Auto Mall in Kenosha, Wisconsin that had additional manufacturer franchises, such as Ford, BMW and Volvo.
CarMax initially began with no fees. The concept was abandoned after it was determined that customers were not concerned about paying transaction fees for the purchase of a vehicle.
The typical CarMax store is approximately 59,000 square feet,[2] carries an inventory of 300–400 vehicles, and turns its inventory over eight to ten times a year. On average, a CarMax location employs 40 sales associates.[2] The average store is larger than the vast majority of automobile dealerships within a market area. Occasionally, it may be the largest within the market area.
CarMax does not negotiate on the price of a vehicle; the listed price is the sales price. If a customer wants to trade in a vehicle, that is treated as a separate purchasing transaction, which does not affect the listed price of the vehicle that CarMax is selling. These appraisals are based on real time, current market values for the vehicle that the customer wants to trade. Carmax then drops the offer by $500 to $1000; a practice known by Carmax as "ACR" or "Appraisal cost recovery". The term is also known as "boxing a trade" in the rest of the automobile industry. The appraisal, minus the ACR, is then presented to the customer as a market based, non negotiable offer to purchase. This gives Carmax an additional $500-$1000 of built in profit on the car if the customer chooses to sell the car. ACR was originally referred to as "Austin's Cash Reserve" in honor of Austin Ligon, Carmax's first CEO.
More than half of the inventory is purchased directly from private owners, many as trade-ins, while the remainder comes from Dealer only auctions such as Manheim Auctions.
On average, a purchased vehicle has 12 hours of work done to it before being put up for sale. Each car gets a 30-day warranty and a five-day free return policy.[3]
Sales and revenues
The first CarMax used car auto superstore was opened in September 1993, 1.7 miles from Circuit City's corporate offices in Richmond, Virginia. As of April 17, 2008, CarMax operated 93 used car superstores and seven new car franchises, all of which are integrated or co-located with its used car superstores.[4]
Circuit City issued the first CarMax stock in February of 1997, when CarMax had seven locations. Initially the stock was a tracking stock still under the umbrella of the Circuit City; CarMax officially split from Circuit City as of October 1, 2002, when it was spun off as a stock dividend for Circuit City shareholders, with shares also issued to those holding CarMax tracking stock.[citation needed]
During the 12-month period ending February 29, 2008, the company sold 377,244 used cars.[5] CarMax trails Fort Lauderdale, Florida-based competitor AutoNation Inc. in total car retail sales, but CarMax holds a larger used-car operation.[2]
According to the CarMax fiscal year 2009 expectations released on April 2, 2008, the company plans to open 14 used car superstores as well as opening 2 additional car buying centers.[6]
Awards
CarMax has been named "America's Most Admired Company in Automotive Retailing" by Fortune magazine, It also was on Fortune's "100 Best Companies to Work For" list in 2005 (#87), 2006 (#93), 2007 (#88), and 2008 (#46).[7] [8]
CarMax's home office in Richmond, Virginia has received a Leadership in Energy and Environmental Design (LEED) Silver Certification by the U.S. Green Building Council (USGBC).
Charity
CarMax operates the CarMax Foundation, which the company established in 2003. Through the foundation, the company donates to charities and causes in communities near locations through donations, grants, service projects, and matching gifts. In the company's fiscal year 2007, over $1.1 million was donated to various charitable causes; that figure represents about 1/2 of one percent of profits, and about 1/100 of one percent of sales.[9]
References
- ^ Michael Myser, "The Wal-Mart of Used Cars: Unlikely big-box chain CarMax has transformed the world of auto retailing", Business 2.0 magazine, October 2, 2006
- ^ a b c Jerimiah McWilliams, "No-haggle auto giant CarMax to open first store in Hampton Roads", "'The Virginian-Pilot, October 26, 2005
- ^ Jennifer Openshaw, "Buying a new car? Take a trip down the used luxury aisle first", MarketWatch.com, August 3, 2006
- ^ media.carmax.com
- ^ Corporate-IR.net
- ^ Corporate-IR.net
- ^ Corporate-IR.net
- ^ media.carmax.com
- ^ carmaxcares.com