As the prices of new cars continue to rise, the used-car market is thriving. This means that your business will most likely succeed if you have the right business skills and tools. But did you know how CarMax was founded?
Circuit City, a now-defunct consumer electronics company, founded CarMax.
The Pioneers in the Industry
CarMax was the first retailer to pioneer the used car superstore concept. No site offered people the option of viewing a large inventory of vehicles in one convenient web location before they began offering their extensive services. They started the company in Richmond, Virginia, opening their first store in 1993.
As industry observers noted at the time of its launch, CarMax sparked a revolution in used car retailing, causing fear among legions of traditional, small-sized dealers and establishing a new business model quickly copied by others. Richard Sharp and W. worked together to develop the concept. Ligon, Austin.
Circuit City Stores, Inc. was the corporate entity behind the formation of CarMax. Sharp led Circuit City, a 375-store consumer electronics chain with $7 billion in sales in the early 1990s. Ligon worked as Circuit City’s senior vice president of corporate planning, reporting to Sharp. Together, they created the CarMax business model inspired by the vast Circuit City chain and its big-box retail concept.
By 1993, Harp and Ligon were ready to put their theories to the test. Sharp and Ligon opened their first superstore, a lot operating under the banner CarMax: The Auto Superstore, in October 1993, using money from Circuit City to finance the startup. The Richmond, Virginia, showroom was the first unit of the newly formed CarMax Group, a wholly-owned subsidiary of Circuit City. The Richmond lot served as a model for the other used car superstores that would follow: 500 cars were on display, each less than five model years old and less than 70,000 miles on the odometer. (Source: Funding Universe)
The No Haggle Policy
CarMax’s no-haggling policy, which created a less adversarial atmosphere between salespeople and customers, was supplemented by computer kiosks that displayed the lot’s inventory and specific details about each vehicle.
If you like a car, it will have a price sticker on the window. There’s no need to haggle because this is the price you’ll have to pay if you want the car. The company is fully committed to offering low vehicle prices and does not engage in number games with its customers.
They set a reasonable price and stick to it. It’s pointless to haggle with them, but you’ll notice that the prices are frequently lower than what most car lots offer because they cut out the time-consuming rhetoric and are very upfront about the value of the vehicle, so, at the very least, you won’t have to go through this hassle when you’re just trying to get a vehicle at a reasonable price. Behind the scenes, nothing is going on with the numbers.
CarMax maintains a fleet of used vehicles for sale ranging in age from one to six years, but the company also buys and sells vehicles older than six years. CarMax ensures that each vehicle on its lot has passed an inspection that covers more than 125 points. They inspect the engine, transmission, cooling, and fuel systems, among other things. They inspect all major systems to ensure they are in good working order. (Source: Funding Universe)
Image from DallasInnovates