You may have seen Carmax's catchy TV commercials to let private owners know, "We Buy All The Cars" (old cars, new cars, even Purple Wizard Vans) and "We Buy Your Car Even If You Don't Buy Ours" ('WBYCEIYDBO'). A large share of them will be flagged for immediate auction disposal without being offered for sale to the public. That brings in about 22,000 vehicles, but not all them will qualify for resale on their lots due to age, mileage or condition. So, where does Carmax get the 58,000 cars they need every month to feed the machine? Here are their three primary sources: Trade-in OffersĪpproximately 35-40% of the 58,000 vehicles Carmax sells retail each month involves a buyer trade-in. That means on average, Carmax needs to replace (buy) approximately 58,000 vehicles each month to maintain inventory on its lots. A highly efficient used car dealership (like Carmax) will turn its retail inventory every 45 days. There is an old saying in sales, “you can’t sell apples from an empty apple cart.” Carmax the Buyer - Feed the MachineĪ recent search on Carmax’s website showed 86,807 vehicles for sale. Their business model requires a constant inflow of used vehicles from various sources, making Carmax the largest used car buyer in the country too. You may only see your local store in action, but Carmax the company is one huge “used cars for sale” machine that cranks out used vehicles across America.Ĭarmax’s core business is selling late-model cars, trucks, vans and SUVs for a profit. Now, magnify that by 195 corporate-owned large volume locations in dozens of unique retail markets. Keep in mind, running a single point medium-size used car operation is a high risk, capital intensive, process-oriented business. How the Carmax Model WorksĪt the heart of Carmax's success is an obsession with business discipline and process management. There is no question Carmax is good at what they do, but the million dollar question is, "w hen I need to sell my car, is there a way to beat Carmax's offer without giving up convenience?" Before answering that question, it is helpful to understand how Carmax really works. That makes them America's biggest used car dealer group. In fact, Carmax's annual sales (retail and wholesale) exceeded 1 million units for the first time in 2016. Since 1993, Carmax has become ‘The Auto Superstore' with 195 locations and more than 8 million used vehicles sold throughout the United States.
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