CarMax 2006 Annual Report Download - page 17

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15 CARMAX 2006
CARMAX 2006 15
■For the foreseeable future, we believe we can achieve
average comparable store used unit growth in the range
of 4% to 8% per year. This range assumes modest over-
all market growth, continued CarMax market share
gains, and the effect of higher sales growth rates at stores
that have not yet reached basic maturity.
■We estimate that we have an 8% to 10% market share
of late model, 1- to 6-year-old used cars within the
trade areas of our most mature stores. This benchmark
implies a sales potential of approximately $25 billion
in today’s dollars as our stores reach maturity and we
achieve full national scope.
■Our market share is significantly higher within a 5- to
10-mile radius of our most mature stores. Our satellite
store additions and our small market store test will help
us to determine incremental market share opportunities
and optimal storing densities and patterns.
DEFENSIBLE COMPETITIVE
ADVANTAGE
■There have been several unsuccessful attempts to repli-
cate the CarMax model. Competitors who have tried
to copy our concept have typically failed because they
focused only on our consumer concept. They ignored
the hidden danger of failing to build strong operating
processes early in concept development.
■At present, we are fortunate to have no similar-format,
multi-market challengers. This advantageous competitive
landscape is allowing us to expand on our own timetable,
following our own strategic priorities.
■CarMax has a more than 12-year development advan-
tage over any challenger who attempts to copy our busi-
ness. Building an organization, developing specialized
processes and systems, refining execution…all take time.
■CarMax intends to stay ahead of any potential competi-
tion through relentless attention to people, processes,
and execution.
By focusing on used cars, CarMax can grow organically, unrestrained by franchise law
or manufacturer restrictions. At the end of fiscal 2006, we had 67 used car superstores
in 31 U.S. markets representing approximately one-third of the U.S. population. We
believe the combination of continued geographic expansion and market share gains
resulting from our consumer-preferred concept can fuel growth for years to come.
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67
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In-store inventory kioskTest drive
STORE EXPANSION
(Number of used car superstores at fiscal year end)