CarMax 2005 Annual Report Download - page 13

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STORE MANAGEMENT TEAMS
PURCHASING AND INVENTORY
MANAGEMENT
■More than half the cars we retail are purchased directly
from consumers, an excellent source of quality, high-
demand vehicles. Customer vehicle purchases that
do not meet our retail standards are sold at our own
in-store auctions, which are an economic and efficient
means of disposal.
■We have built a team of approximately 600 skilled
buyers.The team includes 154 buyers who have
each completed more than 10,000 appraisals and an
additional 11 buyers who have surpassed the 20,000-
appraisal mark. Our buyers have online access to infor-
mation on current inventory and recent sales, as well
as wholesale industry information. Our high volume
of in-store appraisals and outside auction purchases
provides a great training ground that gives us an
advantage compared with other used car retailers.
■Our inventory and pricing models help us:
•Buy the mix of makes, models, age, mileage, and
price points tailored to the buying preferences at
each superstore.
•Recommend pricing adjustments based on complex
algorithms that take into account factors including
sales history, consumer interest, and seasonal patterns.
•Optimize inventory turns to help maintain gross
margin dollars per unit and minimize the deprecia-
tion risk inherent in used cars.
RECONDITIONING
■The majority of our service operation resources are
used in vehicle reconditioning, which supports our
used vehicle sales.
■We employ state-of-the-art production techniques,
and we focus on balancing quality, speed, and cost.
Our production planning process allows us to match
reconditioning capacity and inventory demand across
multiple stores.
■We are maximizing our service bay utilization by
implementing 24/7 shift scheduling where appropriate.
■Over the past several years, we have reduced our
work-in-process cycle time by 50% through our
improved process and production techniques.
■Automotive technicians are in short supply in the U.S.
We are able to attract and retain skilled technicians
by offering a superior working environment, including
air conditioned bays, a corporate benefit program, and
the opportunity for career advancement.We also have
developed an extensive in-house apprentice program.
CARMAX 2005 11