CarMax 2007 Annual Report Download - page 7

CARMAX 2007
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[FAR LEFT] Our extensive training
programs include classroom
and on-line training, as well
as formal mentoring.
[LEFT] Customers can search
each store’s vehicle inventory
and print detailed vehicle spec
sheets using our in-store
information kiosks.
Unlike new vehicles, every used vehicle is unique based on
age, mileage, condition, and options. This uniqueness offers
CarMax the opportunity to add value.
We provide our associates with extensive training and
hands-on experience in buying, reconditioning, and selling
vehicles. In addition, since our inception in 1993, we have
collected and maintained a variety of information on every
vehicle that we have bought and sold, which gives us an
unprecedented database of information on used vehicles. And,
because our unit sales volumes are so high compared with the
average dealer — each month we sell an average of 425 used
cars per store, compared with about 110 used and new cars
for the average new car dealer — we believe we have a scale
and efficiency opportunity unmatched in automotive retail.
We are in a unique position to add value to the consumer
offer by evaluating which vehicles to sell at retail and by recon-
ditioning them to the highest standards in the industry. At the
same time, we enhance the value to our shareholders by main-
taining the most advantageous inventory mix at each location
and by targeting the gross profit per unit that strikes the appro-
priate balance between driving sales and improving profits.
Low, fixed prices, customer-friendly service, and trans-
parency throughout the process of selling and buying a vehicle
are ways CarMax offers greater value. Customers view all per-
tinent information along with their sales consultant, including
financing alternatives; there are no “hand-offs” to finance or
sales managers. Our easy financing process allows the cus-
tomer’s application to be electronically forwarded to multiple
lenders for evaluation and often results in competitive financ-
ing alternatives. Not only does this promote complete trans-
parency, but it assures the customer that the finance offers
are coming directly from the lenders, with no modification by
CarMax associates.
CarMax builds transparency into our consumer offer in
other ways, as well. For example, our appraisal offers are
good for 7 days. We offer our customers a 5-day, money-back
guarantee, a minimum 30-day limited warranty, and a free
3-day payoff option for all loans originated at our stores.
By focusing on used cars, we are not limited by the fran-
chise laws and manufacturer restrictions that restrain organic
growth opportunities for franchised auto retailers. At the end
of fiscal 2007, we had 77 used car superstores located in
36 markets, covering roughly 40% of the U.S. population. We
believe that the combination of continued geographic expan-
sion, together with market share gains in our current markets,
will fuel our growth for years to come.
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Since opening our first store in September 1993,
we have grown our store base at a compound annual rate
of approximately 40% and in the process have become
the nation’s largest retailer of used vehicles.
STORE EXPANSION
(Number of used car superstores at fiscal year end)