Profile: Carmax Inc (KMX)

KMX on New York Consolidated

64.87USD
23 Jan 2015
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$0.63 (+0.98%)
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CarMax, Inc. (CarMax), incorporated on October 4, 1996, is a holding company and its operations are conducted through its subsidiaries. The Company operates in two segments: CarMax Sales Operations and CarMax Auto Finance (CAF). The Company’s CarMax Sales Operations segment consists of all aspects of its auto merchandising and service operations, excluding financing provided by CAF. Its CAF segment consists solely of its own finance operation that provides vehicle financing through CarMax superstores.

CarMax Sales Operations

The Company is the retailer of used cars, based on the 526,929 used vehicles the Company retailed during the fiscal year ended February 28, 2014. As of the end of fiscal 2014, it operated 131 used car superstores in 64 metropolitan markets. In addition, it is a wholesale vehicle auction operator, based on the 342,576 wholesale vehicles it sold through its on-site auctions in fiscal 2014. All of the used vehicles the Company retails are reconditioned to meet its high standards, and each vehicle must pass a inspection before being offered for sale. In addition, it sells new vehicles at four locations under franchise agreements with three new car manufacturers. In fiscal 2014, new vehicles comprised only 1% of its total retail vehicle unit sales. Its finance program provides customers financing alternatives through CAF, its own finance operation, and third-party financing providers.

CarMax Auto Finance

CAF provides financing to qualified customers purchasing vehicles at CarMax. Because the purchase of a vehicle is generally reliant on the consumer’s ability to obtain on-the-spot financing, it is important to its business that financing be available to creditworthy customers. CAF offers financing solely to customers purchasing vehicles at CarMax. CAF offers qualifying customers an array of competitive rates and terms, allowing them to choose the one that best fits their needs. CAF financed 41% of its retail vehicle unit sales in fiscal 2014. As of February 28, 2014, CAF serviced approximately 532,000 customer accounts.

Merchandising

The Company offers customers a selection of makes and models of used vehicles, including both domestic and imported vehicles . The Company also offers used cars that are generally between seven and 11 years old. The mix of its used vehicle inventory by make, model and age varies from time to time, depending on consumer preferences.

Wholesale Auctions

Vehicles purchased through its in-store appraisal process that do not meet its retail standards are sold through on-site wholesale auctions. As of February 28, 2014, wholesale auctions were conducted at 60 of its 131 superstores and were generally held on a weekly or bi-weekly basis.

Extended Service Plans and Guaranteed Asset Protection

At the time of the sale, it offers the customer an Extended Service Plans (ESP). The Company sells these plans on behalf of unrelated third parties that are the primary obligors. The Company has no contractual liability to the customer for claims under the service agreements. The ESPs it offers on all used vehicles provide coverage up to 72 months (subject to mileage limitations) and include multiple mileage and deductible options, depending on the vehicle odometer reading, make and model. The Company offers ESPs at competitive, fixed prices, which take into consideration the historical repair record of the vehicle make and model, the mileage option selected and the deductible chosen. The Company also offers GAP at the time of the sale. GAP is a product that pays the difference between the customer’s insurance settlement and the finance contract payoff amount on their vehicle in the case of a total loss or unrecovered theft.

Reconditioning and Service

An integral part of its used car consumer offer is the reconditioning. This process includes inspection of the engine and all systems, including cooling, fuel, drivetrain, transmission, electronics, suspension, brakes, steering, air conditioning and other equipment, as well as the interior and exterior of the vehicle. All CarMax used car superstores provide vehicle repair service, including repairs of vehicles covered by its ESPs. The Company also provides factory-authorized service at all new car franchises.

Customer Credit

The Company finance program provides customers financing alternatives through CarMax Auto Finance (CAF), its own finance operation, and third-party financing providers. The Company periodically tests additional third-party providers. Retail customers applying for financing provide credit information that is electronically submitted by sales consultants through its information system.

The Company competes with Manheim and KAR Auction Services, Inc.

Company Address

Carmax Inc

12800 Tuckahoe Creek Parkway
RICHMOND   VA   23238
P: +1804.7470422
F: +1804.7475848

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