CarMax: Undisputed used-car champion
Arlena Sawyers  Automotive News | July 22, 2013 - 12:01 am EST | |||||||||||||||||||||||||||
CarMax Inc., the nation's largest retailer of used vehicles, is big. How big? It's so big that it sold at retail twice as many used cars and trucks in its 2012 fiscal year as its nearest competitor -- new-car juggernaut AutoNation Inc. -- sold in 2012. It's so big that it sold more used units than its third-, fourth- and fifth-place competitors combined sold in 2012. A supplement to this issue of Automotive News focuses on the used-vehicle operations of the top 100 U.S. franchised dealership groups, as ranked by their unit retail sales of used cars and trucks. The data are drawn from the same survey that is used to produce the annual list of the top 125 U.S. dealership groups, ranked by new-vehicle retail sales units. There are several similarities between the two lists, with nine of the top 10 dealership groups being the same. But there are also differences. For example, Victory Automotive Group, of Canton, Mich., is No. 48 when ranked by new-vehicle sales but No. 13 in used sales. But the biggest difference is the biggest player: The dominance of CarMax on the used-sales ranking. Publicly held CarMax, of Richmond, Va., specializes in used vehicles up to 6 years old, offering consumers no-haggle prices and a low-pressure buying environment. Selling late-model used vehicles pays. The average retail selling price of a CarMax used vehicle was $18,995 in its fiscal year ending Feb. 29, 2012, vs. $17,547 at franchise dealerships in 2012, as reported by the National Automobile Dealers Association. In its fiscal year that ended Feb. 29, 2012, CarMax's retail sales of used vehicles increased 3 percent from the previous fiscal year to 408,080 units, while revenues from such sales rose 9 percent to $7.83 billion. Fast forward to CarMax's fiscal year that ended Feb. 28, 2013. The company saw retail sales of used vehicles rise 10 percent to 447,728, while revenues generated by retail used-vehicle sales increased 12 percent to $8.75 billion. During the worst of the recession, CarMax suspended its store growth, but its expansion pace is now moving at an average of roughly one store a month. CarMax operated 118 dealerships selling used vehicles on Feb. 28. Since then it has opened five others, in Harrisonburg, Va.; Columbus, Ga.; Savannah, Ga.; Jackson, Tenn.; and Katy, Texas. Eight more are scheduled to open by Feb. 28, 2014. Tops in used units
"We currently estimate capital expenditures will total approximately $300 million in fiscal 2014," the company said in April, as it reported results for the fiscal year ending Feb. 28. "We expect to open between 10 and 15 superstores in each of the following 2 fiscal years." CarMax is also the largest seller of used vehicles at wholesale. It increased its wholesale unit sales 20 percent to 316,649 in the 12-month period that ended Feb. 29, 2012. Those sales generated $1.72 billion, a 32 percent increase from the year earlier. The company is in the unique position of operating its own auctions and owning all of the vehicles it sells at those. That, it says, allows it to maintain a high auction sales rate. "This high sales rate, combined with dealer-friendly practices, makes our auctions an attractive source of vehicles for independent used car dealers," the company says in recent filings with the U.S. Securities and Exchange Commission. CarMax declined to speak with Automotive News for this story. As of Feb. 28, CarMax conducted weekly or biweekly auctions at 57 of its used-car superstores. CarMax sells new cars and trucks, too. Four of its dealerships sold 7,679 new vehicles in the fiscal year ending Feb. 29, 2012, making it No. 107 on the Automotive News ranking of dealership groups by 2012 new-vehicle unit retail sales. | |||||||||||||||||||||||||||
| PRINTED FROM: http://www.autonews.com/apps/pbcs.dll/article?AID=/20130722/RETAIL04/307229961&template=printart | |||||||||||||||||||||||||||
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