CarMax 2005 Annual Report Download - page 7

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NON-COMMODITY
■Unlike new cars, every used car is unique, reflecting
differences in mileage, condition, and age.This unique-
ness provides CarMax the opportunity to add value.
■We carefully select the vehicles we offer for retail sale.
Our choices are driven by our high quality standards
and our exceptional understanding of consumer buying
preferences at each of our superstores.
■Every retail vehicle undergoes a rigorous reconditioning
process to ensure it meets our high quality standards.
FRAGMENTED COMPETITION
■The U.S. used car marketplace is highly fragmented
and includes about 21,650 franchised new car dealers
and 49,900 independent dealers, as well as millions
of private individuals.
■Our primary competitors are the 21,650 franchised
new car dealers who sell the majority of late-model,
1- to 6-year-old used vehicles.These dealers focus
primarily on new cars and secondarily on financing
and service. Used car retailing is often a lower priority
business for them.
■Independent dealers predominantly sell older, higher
mileage cars than does CarMax.
■To date, there have been no successful, large-scale attempts
to replicate the CarMax used car superstore model.
CONSUMER NEED
■Our consumer research confirms that most consumers
dislike the traditional high-pressure sales tactics
employed by many auto retailers.
■For more than 20 years, “car salesmen” have ranked last
in the annual Gallup survey on the honesty and ethics
of various professions.
■The CarMax customer-friendly consumer offer is
unique in auto retailing.We eliminate the traditional
adversarial relationship and let customers shop for cars
the same way they shop at other “big-box” retailers.
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040302010099989796959493
STABILITY PROVIDED BY CONSISTENT TURNOVER
OF VEHICLES IN OPERATION
(Percent annual turnover*)
1 out of 5 vehicles in operation in the U.S. changes hands annually.
*Total used vehicle sales divided by total vehicles in operation
Source: Manheim Auctions and ADESA, Inc.
CARMAX 2005
5
STORE MANAGEMENT TEAMS