Executive Summary
Founded in 1993 as a subsidiary of now defunct Circuit City, CarMax changed the used
automobile industry. Before CarMax arrived on the scene the only way to buy a used car was to
drive from dealership to dealership and partake in soul sucking price battles. This battle was a
game of wits that required the buyer to possess nerves of steel, an unshakable poker face and the
energy to go ten rounds in the ring with professionals. At the end of the battle, if you drive away
in your used car, no matter what you paid, you will still carry the insecurity of not knowing if
you actually got a good deal or not. CarMax indeed revolutionized the landscape when they
introduced their “No Haggle” buying policy. CarMax promised a buying experience to the
customer that removed the headaches and replaced it with transparency and convenience. They
were the first dealership to rely heavily on Internet traffic and are continuing and building upon
this innovative marketing tactic with their mobile app (Folan, 2013).
Since their first store in Richmond VA after receiving a $50 million dollar loan, CarMax
has grown to become the largest used car retailer in terms of the number of used cars sold. It has
191 stores nation wide, is publicly traded on the New York Stock Exchange with a market cap
$11.66 billion dollars and has a revenue $701 thousand dollars per employee (KMX, 2018).
CarMax. In addition to purchasing, reconditioning and selling used vehicles at no haggle prices.
CarMax appraises consumers' vehicles free of charge and makes written offers to buy each
vehicle regardless of whether the consumer is purchasing a vehicle from CarMax or not
(Prospectus, 2018). In addition to purchasing from wholesale auctions this appraisal process
accounts for a significant amount of CarMax’s inventory. All of the used vehicles CarMax sells
at retail are reconditioned to meet its high standards, and each vehicle must pass a
comprehensive inspection before being offered for sale. Vehicles purchased from consumers
through the appraisal process that do not meet CarMax's retail standards are sold to licensed
dealers (Prospectus, 2018). Bottom line CarMax is number in used car sales because it is not
only the best place to buy a used car but also the best place to sell one.
Folan, B., Vourman, I., & Rojo, A. (2013). CarMax Strategy Report. Bridges Consulting, April.
Retrieved February 11, 2018, from http://economics-
files.pomona.edu/jlikens/SeniorSeminars/Likens2013/reports/carmax.pdf
KMX Stock Price - CarMax Inc. Stock Quote (U.S.: NYSE). (2018). Retrieved February 11, 2018,
from https://www.marketwatch.com/investing/stock/kmx
Prospectus. (2018). CarMax Auto Owner Trust, 2018-1. Retrieved February 11, 2018, from
http://s21.q4cdn.com/483767183/files/doc_downloads/Disclaimer/2018/CAOT-2018-1-
Final-as-printed-Prospectus_locked.pdf
