Why CarMax Makes More Money on Used Cars Than Anyone Else • Hacker News Board

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#51

Post by propogandist » Sun, Jun 03, 2018, 5:36 PM UTC

bruceb wrote: post #38

kalleboo wrote: post #6

Earlier quoted context omitted.

The warranty can be a really good value on some used cars https://youtu.be/MzQCj-dbgN0

Whats weird is he never says exactly what he paid for the Range Rover in the first place. I found a post where he said it was in the 30s. but why not tell that info? Then could compare Car cost + warranty vs private party purchase.

why would he? The point of the video is to highlight the value Doug derived from the carmax warranty. He has one for the Aston, which goes into detail on cost of the car etc. https://www.youtube.com/watch?v=hrrFAjxKtj0

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#52

Post by ydt » Sun, Jun 03, 2018, 5:37 PM UTC

larsiusprime wrote: post #45

nosequel wrote: post #20

Carmax makes a ton of money because they bring new meaning to "low-ball" when they offer to buy your car. Go see what they'll offer you for a car just as a test, then go look up your car value on KBB, edmunds, anything. When I sold my last car, they offered me $2k and I ended up selling it the next week for $7k. Carmax goes after people who are either too lazy to sell it themselves or too desperate and need the money…

This is just anecdata. We bought a used car at Carmax and they gave us way, way, way above bluebook value for our trade-in (and all other offers, too -- and we were pretty aggressive in researching trade-in offers at other places and were prepared to be underballed by Carmax). My anecdata is no more useful than yours. Unless someone provides some actual reliable data points to produce a real, known trend, there's no…

My experience was similar. I sold a 2006 to them that had major visible rust issues. The KBB was 1650, they gave me 1600. I was surprised they bought it at all to be honest.

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#53

Post by csours » Sun, Jun 03, 2018, 5:37 PM UTC

jjnoakes wrote: post #50

csours wrote: post #37

Earlier quoted context omitted.

Completely agree with user cstejerean here. You didn't say anything about your car, but I will hazard a guess that it was over 10 years old, but still a somewhat rare or desirable vehicle. Carmax doesn't want vehicles over 10 years old. Also, to other commentors here, consider tax implications when you compare sale price on a trade-in. If you wind up paying taxes on the sale of your vehicle, that may offset the incre…

Don't buyers pay the sales tax?

It appears that I had an incorrect assumption:

https://www.dmv.org/articles/income-tax-implications-of-sell...

Note that this is not an official DMV site for any government organization

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#54

Post by BeetleB » Sun, Jun 03, 2018, 5:38 PM UTC

>CarMax is an absolute powerhouse when it comes to pre-owned vehicle retailing.

I never understood the use of the phrase "pre-owned". I know it's short for "previously owned", but why not say "used"? My brain keeps parsing it as "before it is owned". And does anyone use this outside of the US/Canada?

The other day I went to an event where the check-in clerk asked "Are you pre-registered?" I asked "Is that different from being registered?" Turned out it wasn't different. So why say "pre-registered"?

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#55

Post by drblast » Sun, Jun 03, 2018, 5:38 PM UTC

They can make money because used car dealerships are an anachronism run by sales morons who are hoping to find a bigger fool to siphon money off of.

Interacting with a car dealership feels like you're walking into a poker game with "sucker" stamped on your forehead.

I recently tried to buy a barely used Lexus from a Lexus dealer and couldn't believe they used the same bullshit New Jersey Pontiac dealer tactics to sell me the car that were dated and transparent in 1987.

The only easier industry to disrupt is probably furniture or mattress sales.

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#56

Post by koolba » Sun, Jun 03, 2018, 5:40 PM UTC

crb002 wrote: post #49

Haul4ss wrote: post #9

CarMax 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 f…

Dealers lose money every day a car sits on their lot. You want a good deal from any dealer, scrape results each week and hit them up on cars that haven't moved for months. They will flip it for $1 over cost just to get it from going red on their books and management getting upset.

Also make a point to go at the end of the month / quarter / year as they'll want to juice the sales numbers for that particular block.

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#57

Post by drblast » Sun, Jun 03, 2018, 5:43 PM UTC

BeetleB wrote: post #54

>CarMax is an absolute powerhouse when it comes to pre-owned vehicle retailing. I never understood the use of the phrase "pre-owned". I know it's short for "previously owned", but why not say "used"? My brain keeps parsing it as "before it is owned". And does anyone use this outside of the US/Canada? The other day I went to an event where the check-in clerk asked "Are you pre-registered?" I asked "Is that different f…

Yeah. And if we're being honest only new cars are "pre-owned."

It's a car before the state of ownership... New.

Pre-registered? It's someone who hasn't resistered yet.

Shouldn't used cars be post-owned?

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#58

Post by praneshp » Sun, Jun 03, 2018, 5:44 PM UTC

goatherders wrote: post #41

illumin8 wrote: post #34

Earlier quoted context omitted.

Yes, another dealership offered me $7500. CarMax was by far the low ball offer.

The difference of 800 for a car in that price range is far from significant.

What? It's 10%, and definitely non-trivial.

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#59

Post by hellogoodbyeeee » Sun, Jun 03, 2018, 5:48 PM UTC

jjnoakes wrote: post #50

csours wrote: post #37

Earlier quoted context omitted.

Completely agree with user cstejerean here. You didn't say anything about your car, but I will hazard a guess that it was over 10 years old, but still a somewhat rare or desirable vehicle. Carmax doesn't want vehicles over 10 years old. Also, to other commentors here, consider tax implications when you compare sale price on a trade-in. If you wind up paying taxes on the sale of your vehicle, that may offset the incre…

Don't buyers pay the sales tax?

When you buy a used car, you pay sales tax on the purchase price less the value of your trade in. So effectively, you need a private sale offer of at least the sales tax rate higher than the trade in offer to break even.

Sales tax wouldn't come in to play if you just sold your car to Car Max though.

Re: Why CarMax Makes More Money on Used Cars Than Anyone Else

#60

Post by aphextron » Sun, Jun 03, 2018, 5:50 PM UTC

drblast wrote: post #55

They can make money because used car dealerships are an anachronism run by sales morons who are hoping to find a bigger fool to siphon money off of. Interacting with a car dealership feels like you're walking into a poker game with "sucker" stamped on your forehead. I recently tried to buy a barely used Lexus from a Lexus dealer and couldn't believe they used the same bullshit New Jersey Pontiac dealer tactics to sel…

>The only easier industry to disrupt is probably furniture or mattress sales.

I walked into a mattress store recently, and was absolutely horrified. It's very obvious what their tactics are. The sticker price on everything was easily 3x what the cost of a decent bed/mattress should be, to the point it was obvious none of the clientele in there would be paying that full price upfront. They only talk about everything in terms of "monthly payments". It's very obviously just a scheme to trap poor people who can't just put an $800 mattress on a 0% credit card into making 5 years worth of payments and interest on something they can't afford.