CarMax 1999 Annual Report Download - page 20

18 CIRCUIT CITY STORES, INC. 1999 ANNUAL REPORT
In 1991, we began looking at growth opportunities beyond the
Circuit City business–opportunities for the 21st century. We believed
the greatest potential lay in larger industries with no significant
national competitor. Extensive research showed that this opportunity
existed in the automotive retail segment. The research confirmed what
we knew intuitively: that consumers wanted to buy cars the same way
they bought other products. They wanted extensive selection; low,
no-haggle prices; high-quality vehicles; and a trustworthy, friendly
retailer. That is the CarMax offer. The industry-leading sales volumes
generated by all our locations prove that we have created a truly
different buying experience–that CarMax is providing a new standard
of service to new- and used-car buyers.
THE DIFFERENCES THAT MAKE A DIFFERENCE
Broad Selection. CarMax locations generally offer from 300 to
600 used vehicles. The selection includes high demand brand
names such as Ford, General Motors, Chrysler, Toyota, Honda,
Nissan and Mitsubishi and specialty brands such as Lexus and
BMW. A CarMax customer can look for a sport utility, truck,
minivan, subcompact, mid-size or luxury car. Last year, we
added a selection of electronic accessories with installation
provided by Circuit City’s automotive installation centers.
CarMax used cars are generally in the current model year
through five years old with fewer than 60,000 miles and range in price
from $6,000 to $30,000. For the most cost-conscious consumers, we
also offer “ValuMax” vehicles, which are either older or have higher
mileage and generally range in price from $3,000 to $18,000. Each of
our new-vehicle franchises offers the manufacturer’s full selection of
makes and models. The majority of our used cars are bought locally,
primarily from individuals. These vehicles are reconditioned and sold
within the local market, helping to ensure that our selection reflects
the buying preferences of consumers in the market.
Vehicles are displayed by type and make on the superstore lot,
or customers can conveniently sort through the selection via the
AutoMation®computer system. This touch-screen system displays color
photos, prices, features and specifications for inventory at each location.
Customers also have access to inventory at other CarMax stores.
Information can be obtained at the store or through the CarMax website.
Low, No-haggle Prices. At CarMax, each customer receives the same
low price with no negotiation. The vast majority of our used cars are
priced well below book prices. For new cars, our goal is to be competi-
tive with the lowest available price in the market. Our low-price, no-
haggle philosophy extends to every stage of the transaction including
warranty prices, financing rates and vehicle documentation fees.
Competitively priced financing is available on site. The sales con-
sultant simply enters basic credit information and submits an on-line
finance application. Primary credit is provided by First North American
Credit Corporation, our automotive finance operation, or Bank of
America. The customer can select from the terms and rates provided.
Sub-prime financing is available from other third-party lenders.
CarMax also brings a unique approach to the “trade-in” process.
CarMax customers are given a written appraisal with a cash offer that is
good for seven days or 300 miles; the price is not dependent on the
purchase of another vehicle from CarMax. Customers may apply their
appraisal voucher to a purchase, or we will simply buy their vehicle for
cash. This straightforward, honest approach helps establish a positive
relationship and provides CarMax a valuable source of vehicles for resale.
CARMAX A new standard of service to car buyers