9/4/2023 0 Comments Carmax car loan![]() ![]() The typical sales price of a vehicle sold at auction was $5,165.ĬarMax offers financing to customers either through its CarMax Auto Finance subsidiary or through “Tier 2” and “Tier 3” providers who cater to customers with lower credit scores. CarMax tends to focus on selling newer vehicles through its retail channel, as evidenced by the average selling price of $19,640 over the first nine months of fiscal 2017. Vehicles obtained via trade-in are either reconditioned in CarMax production facilities or sold at auction. CarMax benefits from a stream of inventory coming in from trade-ins that can be obtained for better prices than through other channels. Effectively, the trade-in of a customer’s vehicle and the purchase of a CarMax vehicle are completely separate and handled transparently. There are other benefits for the customer as well including the ability to sell a trade-in vehicle to CarMax regardless of whether one purchases a vehicle. The company also provides a five day money back guarantee which reduces risk to the consumer. Sales consultants are paid commissions on a fixed dollars-per-unit basis and have no incentives to sell inappropriate financing or extras. The goal is to provide the customer with the same experience they get at a typical “big box” retailer. The CarMax approach is fundamentally different from the typical auto dealership experience primarily because the “no-haggle pricing” policy removes the most contentious part of the process. The total fleet of light vehicles in the United States was approximately 260 million at the end of 2015. In 2015, Over 17 million new cars and 40 million used cars were sold at retail, with an additional 10 million vehicles sold at auction. Although CarMax is the largest used car retailer, it does not have a dominant share of the market. The business model turned out to be very successful and the company is now the largest retailer of used cars in the United States, selling 619,936 vehicles at retail in fiscal 2016 along with an additional 394,437 vehicles through wholesale auctions. CarMax was separated from Circuit City and became a publicly traded company in 2002. The automotive sector was identified due to its large size, fragmented nature, and a reputation for less than stellar consumer satisfaction. In the early 1990s, Circuit City was looking for growth opportunities in different markets outside consumer electronics. ![]() ![]() CarMax was founded in 1993 in Richmond, Virginia under the ownership of Circuit City Stores. ![]()
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