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        home > news > Automakers > CarMax Completing Transition Out of New Car Sales Business

        CarMax Completing Transition Out of New Car Sales Business

        Company selling its last two new vehicle franchises.

        Michael Strong
        Michael Strong , Managing Editor
        Jan. 28, 2021
        CarMax is nearly finished with its shift away from new vehicle sales.

        The nation’s largest used-car seller, CarMax, is now only selling used vehicles, after announcing it was just about complete the sell off its last two new-vehicle retail locations — Toyota dealers. The company’s 220 locations will now sell a little bit of everything, but its biggest thrust is the move to online sales.

        The last two Toyota dealers are in Maryland and Wisconsin, but the brick-and-mortar locations are really more just period on the sentence than the entire novel. The Richmond, Virginia-based used-vehicle retailer began selling new vehicles in 1995, teaming up with then Chrysler Corp., according to Automotive News.

        However, in recent years, the company’s changed its focus from new and used to just used cars, highlighted by the recent completion of its new “omnichannel” sales platform, which essentially bolstered the company’s online sales efforts.

        (Used cars booming, Honda takes aim at retailers like CarMax, Carvana.)

        CarMax recently completed the implementation of its new omnichannel sales platform, including home delivery.

        “This unique omni-channel experience empowers customers to buy a car on their terms – online, in-store, and a seamless integration of both,” the company noted in a release last fall. The timing was prescient as the plans were laid prior to the coronavirus pandemic that hit the U.S. in February and March.

        The move was in response to other used-vehicle retailers, particularly Carvana, which were setting the standard for the industry — and attracting attention for it too.

        Since then, the company’s invested in its ability to sell a car online, including taking care of the financing, and then delivering the vehicle through a contactless curbside pickup or through home delivery anywhere in the country. CarMax has more than 55,000 vehicles in its inventory.

        The new omnichannel program allows customers to have the level of personal interaction they desire. A face-to-face sale from start to finish is still possible, but there is plenty of flexibility when it comes to how much of the process is done in person. That kind of malleability was built into the system because CarMax research suggested buyers were all over the map when it came to how much of the “personal” touch they were comfortable with.

        “When we set out to create the future of car buying, we knew that customers wanted personalized, convenient and on-demand retailer experiences where they can seamlessly navigate between online and in-person, all on their own terms,” said Bill Nash, president and CEO of CarMax, in a statement.

        Used vehicle sales are on the rise as the price of new vehicles continues to rise.

        (Pandemic acts as catalyst for additional change in auto industry, analysts suggest.)

        “CarMax has always stood for empowering the customer and offering an exceptional experience. The significant investments we’ve made in technology and digital innovation, coupled with the tireless efforts of our 25,000 associates nationwide, enable us to deliver this iconic experience the way only CarMax can.”

        While Carvana did help set the tone for changing the marketplace prior to the pandemic, there are plenty of studies showing that the buying process have been irrevocably changed and that more and more people were becoming comfortable and even excited by the prospect of a different paradigm.

        Other mega-retailers like AutoNation and Sonic Automotive are expanding their used-car operations as well, providing even more competition for CarMax. Perhaps even more importantly, Honda recently announced its plans to grab a bigger share of the market. Honda was already invested with its Certified Pre-Owned program, but it revealed in December it was going after a bigger chunk of the non-CPO segment – two-thirds of which aren’t sold by Honda dealers.

        AutoNation is just one of many challengers on the used car sales front for CarMax.

        “With the continued rise in new-vehicle prices, the first vehicle purchase for many buyers will come from the used-car market, and our upgraded website makes this process more simple and enjoyable,” said Dan Rodriguez, manager of auto remarketing at American Honda. By having its franchised dealers pick up more of that business.

        More players in the business isn’t a deterrent apparently, as the used-car retailer remains committed to growth, announcing in October 2020 it wanted to add 3,500 new employees by the end of that year. Additionally, it’s building more stores.

        (Used-car sales show strong rebound in May.)

        “During the third quarter of fiscal 2021, we resumed construction activity on new stores following the pause in our store expansion strategy in the first quarter due to the pandemic. We anticipate opening between eight and 10 stores in fiscal 2022,” the company noted in its most recent earnings report.

        (Check out our review for the CarMax Extended Warranty and Service Plan)

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