CarMax 2001 Annual Report Download - page 22

Creating value for automotive consumers means
providing top-notch customer service, a broad
selection of vehicles and easily accessible product
information. But, most of all, it means providing
low prices on high-quality vehicles. CarMax
delivers the entire value equation.
On average, CarMax used cars are priced
$1,500 below the Kelley Blue Book price. In fiscal
2001, approximately 75 percent of our new cars
were priced below dealer’s invoice. Every consumer
receives these low prices—without having to
negotiate. At CarMax, we extend no-haggle to all
parts of the transaction. Consumers can receive
written appraisals on any vehicle, and we will
buy their cars even if they don’t buy from us. We
also set financing and warranty rates at low, no-
haggle levels and offer customers a choice of
rates and terms when they are approved by more
than one financing source. Other automobile
retailers may offer a good deal on the vehicle or
even advertise no-haggle pricing, but most then
vary the pricing on trade-ins, financing and war-
ranties to earn back the margin lost on the vehicle.
The prices are low, but the quality is high.
Every CarMax used car undergoes our rigorous
Certified Quality InspectionSM. This comprehensive
inspection includes the engine, cooling and fuel
system, drive axle, transmission, electronic systems,
suspension, brake system, steering, air condition-
ing, interior and optional equipment. ValuMax®
must meet the same mechanical, electrical and
safety standards, but fewer cosmetic and optional
equipment standards. Vehicle inspections are
completed systematically by CarMax mechanics,
most of whom are A.S.E.-certified. Fewer than
half the cars we purchase from consumers meet
the CarMax retail standard; the remainder are
wholesaled to other dealers at onsite auctions.
A five-day, 250-mile return guarantee and a
limited 30-day warranty back every used car sold
at CarMax. The majority of customers also choose
to purchase extended warranties that provide
comprehensive mechanical protection for periods
ranging from six months to 72 months. All
CarMax used-car locations provide vehicle repair
service, including warranty service. CarMax
extended warranty customers also have access
to an additional 14,000 independent service
providers nationwide. Factory-authorized warranty
service is available for all new cars at CarMax
new-car franchises.
From the day we opened the doors, consumers
have told us they like CarMax. Today, we operate
37 locations and used cars account for more than
85 percent of the vehicles we sell. We have refined
the offer and strengthened the systems that support
it and our capacity to consistently deliver it. As we
enter fiscal 2002, we are once again beginning to
extend the CarMax offer to customers in new
markets. As we engage in this expansion program,
we expect that continuing to offer consumers
“car-buying the way it should be” will produce
healthy returns for our shareholders.
“OUR SERVICE TECHNICIANS KNOW
THAT WHETHER OR NOT A
CUSTOMER BECOMES A REPEAT
CUSTOMER DEPENDS ON THE QUALITY
OF OUR RECONDITIONING AND
SERVICE OPERATIONS.”
ED HILL
VICE PRESIDENT
SERVICE OPERATIONS
“PAYING THE SAME FIXED DOLLAR
COMMISSION ON EVERY VEHICLE
ALLOWS OUR SALES CONSULTANTS TO
FOCUS ON FINDING THE RIGHT CAR
FOR THE CUSTOMER.”
SCOTT RIVAS
VICE PRESIDENT
HUMAN RESOURCES
20
customers trust
value