Why CarMax Makes More Money on Used Cars Than Anyone Else
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Re: Why CarMax Makes More Money on Used Cars Than Anyone Else
#2There's value in removing negotiations to end consumer. The expectation to negotiate can introduce stress and uncertainty into an already-stressful large purchase. CarMax removes that, and captures the value in higher prices.
But it is interesting that more people don't do a quick check of Kelly Blue Book. For example BMW 328i in article at Carmax is $27k. On KBB selling to private party value is $21k-$23k. Maybe there are some special features on one in Carmax inventory but doubtless there is a markup there.
Re: Why CarMax Makes More Money on Used Cars Than Anyone Else
#3Entire article summarizable under “because people pay more per-unit for service equivalent to elsewhere”:
When it comes to gross profit per unit, on average, CarMax raked in $2,147 per vehicle. Lithia Motors wasn’t far behind at $2,038 while other dealer groups such as Asbury, Penske, AutoNation and Sonic had a profit range between $1,565 and $1,090. Startup Carvana only managed to average $902 per unit.
But the fact that CarMax makes is the most profitable used car retailer in the country, is mostly the direct result of buyers often paying more for cars then they could have found elsewhere with a similar “no-haggle” experience
Re: Why CarMax Makes More Money on Used Cars Than Anyone Else
#4There's value in removing negotiations to end consumer. The expectation to negotiate can introduce stress and uncertainty into an already-stressful large purchase. CarMax removes that, and captures the value in higher prices. But it is interesting that more people don't do a quick check of Kelly Blue Book. For example BMW 328i in article at Carmax is $27k. On KBB selling to private party value is $21k-$23k. Maybe the…
Car max has a long comprehensive waranty. It may be worth it to someone for ther peace of mind.
Re: Why CarMax Makes More Money on Used Cars Than Anyone Else
#5There's value in removing negotiations to end consumer. The expectation to negotiate can introduce stress and uncertainty into an already-stressful large purchase. CarMax removes that, and captures the value in higher prices. But it is interesting that more people don't do a quick check of Kelly Blue Book. For example BMW 328i in article at Carmax is $27k. On KBB selling to private party value is $21k-$23k. Maybe the…
A lot of people are probably happy to pay the premium to avoid the relative uncertainty, risk and awkwardness of a private sale.
Re: Why CarMax Makes More Money on Used Cars Than Anyone Else
#6There's value in removing negotiations to end consumer. The expectation to negotiate can introduce stress and uncertainty into an already-stressful large purchase. CarMax removes that, and captures the value in higher prices. But it is interesting that more people don't do a quick check of Kelly Blue Book. For example BMW 328i in article at Carmax is $27k. On KBB selling to private party value is $21k-$23k. Maybe the…
Car max has a long comprehensive waranty. It may be worth it to someone for ther peace of mind.
The warranty can be a really good value on some used cars https://youtu.be/MzQCj-dbgN0
Re: Why CarMax Makes More Money on Used Cars Than Anyone Else
#7There's value in removing negotiations to end consumer. The expectation to negotiate can introduce stress and uncertainty into an already-stressful large purchase. CarMax removes that, and captures the value in higher prices. But it is interesting that more people don't do a quick check of Kelly Blue Book. For example BMW 328i in article at Carmax is $27k. On KBB selling to private party value is $21k-$23k. Maybe the…
Car max has a long comprehensive waranty. It may be worth it to someone for ther peace of mind.
You pay that warranty on top. And it is good deal for a car that you know will require service. You can find good deals at CarMax. I found a car at CarMax $2k under the dealer. Now maybe I could’ve gotten it cheaper otherwise but I doubt much more.. also you have to realize that used cars are in demand vs new. Today it is often cheaper to buy new.
Re: Why CarMax Makes More Money on Used Cars Than Anyone Else
#8There's value in removing negotiations to end consumer. The expectation to negotiate can introduce stress and uncertainty into an already-stressful large purchase. CarMax removes that, and captures the value in higher prices. But it is interesting that more people don't do a quick check of Kelly Blue Book. For example BMW 328i in article at Carmax is $27k. On KBB selling to private party value is $21k-$23k. Maybe the…
I've never bought a car at Carmax but when I was selling my car they offered me a better price than the dealer.
Re: Why CarMax Makes More Money on Used Cars Than Anyone Else
#9CarMax is not the cheapest option, it never was. Their whole business model is to sell the car at a good-enough price, and to make the sale frictionless. And they've succeeded.
Today they are the market leader, but as the article suggests, if they start to use that leverage to sweeten their markup too much, other competitiors will come along and offer something better.
This is really just a news article about how a free market works.