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Thread: CarMax Business Practices

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    Default CarMax Business Practices

    I know William likes to sell his cars to Car Max, but I have now had two bad experiences at CarMax. When I bought my daughter her used '06 Mustang in 2008, I looked at cars at CarMax. But the prices were easily 40% higher than at other used car lots, not to mention private sellers. I ended up buying the car off the used car lot of a Honda dealer and think the price was reasonable.

    Today I went to CarMax to try to sell the same Mustang. They gave me a really low-ball price. I think they want to mark it up at least 80% from what they offered me. They have big, clean, slick showrooms and lots of nice, uniformed sales people who don't hassle you or give you a hard time, and the appraisal process was quick, but CarMax is a clip joint, just looking for suckers (sorry William). They had an S2000 on the lot for a very high price (which I know, because I just bought one).

    People who don't want any sales pressure are sure paying a high price for that at CarMax. I can understand how profitable these nationwide used car dealerships must be. After all, "there's one born every minute . . ."
    The deposed former Sheriff of trackHQ . . .

    2006 Porsche 997 Carerra Coupe 6-MT - daily driver
    1992 Honda (Acura) NSX 5-MT - classic investment I couldn't resist and occasionally drive
    2004 Honda S2000 AP2 6-MT - track day car
    2006 Mitsubishi Lancer Evolution IX MR 6-MT - when I need a backseat, 4-doors, or a real trunk, and still want to haul ass . . .

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    JJ1
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    How much did they want for the s2k and how much more was it than you paid for yours if you don't mind me asking?

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    ^^^They were asking $20,998, I think. There -- I answered half of your questions.
    The deposed former Sheriff of trackHQ . . .

    2006 Porsche 997 Carerra Coupe 6-MT - daily driver
    1992 Honda (Acura) NSX 5-MT - classic investment I couldn't resist and occasionally drive
    2004 Honda S2000 AP2 6-MT - track day car
    2006 Mitsubishi Lancer Evolution IX MR 6-MT - when I need a backseat, 4-doors, or a real trunk, and still want to haul ass . . .

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    I find Carmax to be a great place to test drive a variety of cars, though I did buy a car from them years ago when I was too lazy/impatient to really search for a car from a private party.

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    Senior Member Matt Andrews's Avatar
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    I don't buy cars there because I think I can negotiate a better deal that the average Joe could, so I actually prefer to haggle. That being said, I've seen some really good deals on cars that had been in inventory for a while. I just sold them my Scion FRS. They gave me $500 short of what I was asking for it retail. they paid $22500 for a car that 18 mos ago I paid $25500 new. I personally think they way over paid. For what they paid, I have to imagine they will be asking damn near MSRP for a used one.

    I don't know details of your mustang, but I think they pay good money for cars they will retail out of, but if your mustang has miles or is older than what generally exists on their lot, they know they will be sending it to the auction. If you want to give me details on what it is, (year, model, miles, transmission) I can tell you how much it is going for at Manheim auctions who owns the majority of the industry auctions in the country... If they aren't going to retail out of it, they are going to pay a couple hundred bucks to get it to an auction, plus try and make money on it there. So if they aren't going to retail it, I'm sure it was a low ball...

    Matt
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    Depending on the year and condition I would say that is market price in So Cal.

    2 years ago when I bought mine I had to leave the state to get one that had not been molested by tuners, had not driven the distance from the earth to the moon, had an instact softtop AND had the color combination I wanted. While I paid noticably less than that, I bought it in oklahoma. Acceptably clean examples of what I wanted here were much higher.

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    Matt -

    Linky to AutoTrader.com ad Cars for Sale: 2006 Ford Mustang Coupe in Redondo Beach, CA 90277: Coupe Details - 358510929 - AutoTrader.com

    I purposely priced the car below most of the other similar year and mileage Mustangs available on AutoTrader, hoping for a quick sale.

    CarMax offered me $6,000-.

    Quote Originally Posted by Matt Andrews View Post
    I don't buy cars there because I think I can negotiate a better deal that the average Joe could, so I actually prefer to haggle. That being said, I've seen some really good deals on cars that had been in inventory for a while. I just sold them my Scion FRS. They gave me $500 short of what I was asking for it retail. they paid $22500 for a car that 18 mos ago I paid $25500 new. I personally think they way over paid. For what they paid, I have to imagine they will be asking damn near MSRP for a used one.

    I don't know details of your mustang, but I think they pay good money for cars they will retail out of, but if your mustang has miles or is older than what generally exists on their lot, they know they will be sending it to the auction. If you want to give me details on what it is, (year, model, miles, transmission) I can tell you how much it is going for at Manheim auctions who owns the majority of the industry auctions in the country... If they aren't going to retail out of it, they are going to pay a couple hundred bucks to get it to an auction, plus try and make money on it there. So if they aren't going to retail it, I'm sure it was a low ball...

    Matt
    The deposed former Sheriff of trackHQ . . .

    2006 Porsche 997 Carerra Coupe 6-MT - daily driver
    1992 Honda (Acura) NSX 5-MT - classic investment I couldn't resist and occasionally drive
    2004 Honda S2000 AP2 6-MT - track day car
    2006 Mitsubishi Lancer Evolution IX MR 6-MT - when I need a backseat, 4-doors, or a real trunk, and still want to haul ass . . .

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    Quote Originally Posted by Matt Andrews View Post
    I don't buy cars there because I think I can negotiate a better deal that the average Joe could, so I actually prefer to haggle. That being said, I've seen some really good deals on cars that had been in inventory for a while. I just sold them my Scion FRS. They gave me $500 short of what I was asking for it retail. they paid $22500 for a car that 18 mos ago I paid $25500 new. I personally think they way over paid. For what they paid, I have to imagine they will be asking damn near MSRP for a used one.

    I don't know details of your mustang, but I think they pay good money for cars they will retail out of, but if your mustang has miles or is older than what generally exists on their lot, they know they will be sending it to the auction. If you want to give me details on what it is, (year, model, miles, transmission) I can tell you how much it is going for at Manheim auctions who owns the majority of the industry auctions in the country... If they aren't going to retail out of it, they are going to pay a couple hundred bucks to get it to an auction, plus try and make money on it there. So if they aren't going to retail it, I'm sure it was a low ball...

    Matt
    Done with the FRS already? That relationship didn't last too long...
    Do you understand?

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    Short attention span . . . racers . . .
    The deposed former Sheriff of trackHQ . . .

    2006 Porsche 997 Carerra Coupe 6-MT - daily driver
    1992 Honda (Acura) NSX 5-MT - classic investment I couldn't resist and occasionally drive
    2004 Honda S2000 AP2 6-MT - track day car
    2006 Mitsubishi Lancer Evolution IX MR 6-MT - when I need a backseat, 4-doors, or a real trunk, and still want to haul ass . . .

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    Carmax has a pretty specific set of cars/specs they deem to be "in demand", based on their sales, auction prices, social trends (gas mileage, SUVs, etc). If your car meets their criteria, they give a fair price. If not, they lowball you. It doesn't matter if your car is super clean, low mileage, one owner, etc. It's all based on a pricing database.

    They definitely do mark up their cars to compensate for the "ease" of the purchase, but I've also purchased a vehicle there that had sat for a while and it was as cheap as anything else I found on the private market, and in far better condition.

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    I like selling my used cars to carmax. It is a no hassle deal and very fast and they hold there offer for like 7 days. Time is money.

    I also think the true value of anything is what I can get for it right now. You can always wait for a sucker if you wait long enough. It is really about how much effort you want to give it. Anything I give away on the sell I make up on the buy. It is not worth it to me to work hard to win both the buy and the sell.
    Last edited by fatbillybob; 11-10-2013 at 08:56 PM.
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    Senior Member bellwilliam's Avatar
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    What Matt Andrew said.
    I've sold ~4 cars to Carmax. Couple of times I declined their offer, but at least I have 7 days to entertain other offers. That made selling much easier.

    Even if a private party offered me $500 more. I would still sell to Carmax:
    1. Carmax check won't bounce. Yes I can go with the buyer to a bank, but that's time and hassle.
    2. Engine could blow up the next day. Buyer would call and yell at me demanding a refund. Or if you sold to a friend, expect friendship to go xxxxxx
    3. Don't have to deal with tire kickers. One calls you to see the car, and flakes. Or *****es about the car so to haggle. It might take 5 tire kickers to sell the car. Easily 5 hours of your life. And no guarantee car will sell.

    I've never bought a car from Carmax though.
    Last edited by bellwilliam; 11-10-2013 at 10:33 PM.
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    Senior Member Matt Andrews's Avatar
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    Here are the mustangs of similar config that have sold at auction on the west coast.

    The average is $6487 for a car with an average mile of 96000. So while you may not like the price they offered, its probably not far off of what they think they will get for the car at auction plus the time/money it will cost them to transport the car and pay auction fees. Doesn't mean its a good deal for you to sell it to them - but I can understand why they would price it like they have.

    Good luck with the sale.


    mustang.jpg
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    ^^^ Matt - Thanks for your well-considered and seriously-researched analysis. Nevertheless, I did not expect to be offered he lowest possible "get rid of this turkey" BS low-ball auction price when going into my local CarMax. I have the time to wait for a reasonable buyer in a private sale. I will not give every last drop of my blood to the vampires at CarMax.
    The deposed former Sheriff of trackHQ . . .

    2006 Porsche 997 Carerra Coupe 6-MT - daily driver
    1992 Honda (Acura) NSX 5-MT - classic investment I couldn't resist and occasionally drive
    2004 Honda S2000 AP2 6-MT - track day car
    2006 Mitsubishi Lancer Evolution IX MR 6-MT - when I need a backseat, 4-doors, or a real trunk, and still want to haul ass . . .

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    pretty cool data matt! Can regular people search for a data chart like that? Can you clue us in?

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    I sold my Mom's C-class to carmax, got pretty much exactly what I wanted given its market value. Would sell to them again for sure.

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    I've had 3 dealings with carmax (2 purchases and 1 sale) and I think they have a good business strategy. I like the fact that I can search online for the car I want and then go and test drive a bunch of different models. They actually have a cooling off period after buying also. I agree that selling a car there will not result in a great price, but it has benefits as described by Carl and William. I don't have time to list things privately and have strangers come around and tire kick and go for test drives. I will either sell to someone I know or trade it in. Or sell to Carmax. I bought an audi rs4 from carmax and the price was lower than every other rs4 I could find in CA. That was a year ago and the car runs great.
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    Senior Member Matt Andrews's Avatar
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    The info comes from Manheim.com's auction reporting application. Unfortunately, you need to be in the car business in order to have an account.

    Richard- I totally get where you are coming from. I think Carmax is in a little bit of a tough spot when it comes to cars they don't want. You might have preferred them tell you, "no thanks, we don't want it", but if they claim they will buy anything, they need to put a price on things they don't want. Your mustang looks like a great private party car for someone. For a retail organization, its at an awkward age. its too old to get good financing terms and warranties on, which most customers are looking for when they go to carmax, but it is too expensive for most of their clientele to come in and pay cash for.
    Last edited by Matt Andrews; 11-11-2013 at 02:08 PM.
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    Also...for you gross polluters out there...no worry about passing smog or making sure all your emissions stuff is properly hooked up
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    Quote Originally Posted by chongl View Post
    Also...for you gross polluters out there...no worry about passing smog or making sure all your emissions stuff is properly hooked up
    good point !!
    I wonder what happens if the car you sell them don't pass smog (but no CEL light).........
    Last edited by bellwilliam; 11-11-2013 at 04:49 PM.
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