Carmax Inc 's Comment on Competitors and Industry Peers
CarMax Sales Operations: The U.S. used car marketplace is highly fragmented and
competitive. According to industry sources, there were approximately 17,900 franchised
automotive dealerships, which sell both new and used vehicles. In addition, used
vehicles were sold by approximately 37,000 independent used vehicle dealers, as
well as millions of private individuals. Our primary retail competitors are the
franchised auto dealers, who sell the majority of late-model used vehicles. Independent
used car dealers predominantly sell older, higher mileage cars than we do. The
number of franchised and independent auto dealers has declined over the last decade,
in large part due to manufacturers’ franchise and brand terminations, as
well as dealership closures caused by the stress of the recession. Despite this
reduction in the number of dealers, the automotive retail environment remains
highly fragmented.
Based on industry data, there were approximately 39 million used cars sold
in the U.S., of which approximately 22 million were estimated to be 0- to 10-year
old vehicles. While we are the largest retailer of used vehicles in the U.S.,
selling more than two times as many used vehicles as the next largest retailer,
we represented approximately 5% of the 0- to 10-year old used units sold in
the markets in which we operate and less than 3% of the total 0- to 10-year
old used units sold nationwide. Over the last several years, competition has
been affected by the increasing use of Internet-based marketing for both used
vehicles and vehicle financing. We seek to distinguish ourselves from traditional
dealerships through our consumer offer, sales approach and other innovative
operating strategies.
We believe that our principal competitive advantages in used vehicle retailing
include our ability to provide a high degree of customer satisfaction with the
car-buying experience by virtue of our low, no-haggle prices and our customer-friendly
sales process; our breadth of selection of the most popular makes and models
available both on site and via our website, carmax.com; the quality of our vehicles;
our proprietary information systems; CAF; and the locations of our retail superstores.
In addition, we believe our willingness to appraise and purchase a customer’s
vehicle, whether or not the customer is buying a car from us, provides us a
competitive sourcing advantage for retail vehicles. Our large volume of appraisal
purchases supplies not only a large portion of our retail inventory, but also
provides the scale that enables us to conduct our own wholesale auctions to
dispose of vehicles that don’t meet our retail standards. Upon request
by a customer, we will transfer virtually any used vehicle in our nationwide
inventory to a local superstore. Transfer fees may apply, depending on the distance
the vehicle needs to travel.
Our sales consultants play a significant role in ensuring a customer-friendly
sales process. A sales consultant is paid a commission, generally based on a
fixed dollars-per-unit standard, thereby earning the same dollar sales commission
regardless of the gross profit on the vehicle being sold. In addition, sales
consultants do not receive commissions based on the number of credit approvals
or the amount a customer finances. This pay structure aligns our sales associates’
interests with those of our customers, in contrast to other dealerships where
sales and finance personnel may receive higher commissions for negotiating higher
prices and interest rates or steering customers to vehicles with higher gross
profits.
In our wholesale auctions, we compete with other automotive auction houses.
In contrast with the highly fragmented used vehicle market, the automotive auction
market has two primary competitors, Manheim, a subsidiary of Cox Enterprises,
and KAR Auction Services, Inc., representing an estimated 70% of the U.S. whole
car auction market. These competitors auction vehicles of all ages, while CarMax
predominantly sells older, higher mileage vehicles. We believe the principal
competitive advantages of our wholesale auctions include our high vehicle sales
rate, our vehicle condition disclosures and arbitration policies, our broad
geographic distribution and our dealer-friendly practices. Because we own the
cars that we auction, we generally sell more than 95% of the vehicles offered,
which is substantially higher than the sales rate at most other auto auctions.
Our policy of making vehicle condition disclosures, noting mechanical and other
issues found during our appraisal process, is also not a typical practice used
at other auctions of older, higher mileage vehicles. Together, these factors
make our auctions attractive to dealers, resulting in a high dealer-to-car attendance
ratio.
CarMax Auto Finance: CAF operates in the auto finance sector of the consumer
finance market. This sector is primarily comprised of banks, captive finance
divisions of new car manufacturers, credit unions and independent finance companies.
We believe that CAF’s principal competitive advantage is its strategic
position as the primary finance source in CarMax stores. We believe the company’s
processes and systems, transparency of pricing, vehicle quality and the integrity
of the information collected at the time the customer applies for credit provide
a unique and ideal environment in which to procure high quality auto loans.
CAF utilizes proprietary scoring models based upon the credit history of the
customer along with CAF’s historical experience to predict the likelihood
of customer repayment. Because CAF offers financing solely through CarMax stores,
scoring models are optimized for the CarMax channel.
CAF’s primary competitors are banks and credit unions that offer direct
financing to customers purchasing cars from dealers. Some of our customers have
already obtained financing prior to shopping for a vehicle and do not apply
for financing in the store. We also offer customers the ability to pay off their
loans within three days without penalty. The percentage of customers exercising
this option can be an indication of the competitiveness of our rates.
Marketing and Advertising. Our marketing strategies are focused on developing
awareness of the advantages of shopping at our stores and on carmax.com and
on attracting customers who are already considering buying or selling a vehicle.
Our marketing strategies are implemented primarily through traditional and digital
methods, including national and local television and radio broadcasts, carmax.com,
Internet search engines and online classified listings. We also reach out to
customers and potential customers to build awareness and loyalty through Facebook,
Twitter and other social media. Television and radio advertisements are designed
to build consumer awareness of the CarMax name, carmax.com and key components
of the CarMax offer. Broadcast and Internet advertisements are designed to drive
customers to our stores and to carmax.com. We also build awareness and drive
traffic to our stores and carmax.com by listing retail vehicles on various online
automotive classified sites. Our advertising on the Internet also includes advertisements
on search engines, such as Google and Yahoo!, as well as online properties such
as Pandora and Hulu.
We strive to adjust our marketing programs in response to the evolving media
landscape. We have customized our marketing program based on awareness levels
in each market. We have transitioned a portion of our television and radio advertising
to national cable network and national radio programming and we will continue
to seek to optimize our media mix between local and national distribution. In
addition to providing cost savings, this transition allows us to build awareness
of CarMax prior to our entrance into new markets. Our carmax.com website and
related mobile apps are marketing tools for communicating the CarMax consumer
offer in detail, sophisticated search engines for finding the right vehicle
and a sales channel for customers who prefer to initiate part of the shopping
and sales process online. The website and mobile apps offer complete inventory
and pricing search capabilities. Information on the thousands of cars available
in our nationwide inventory is updated several times per day. Carmax.com includes
detailed information, such as vehicle photos, prices, features, specifications
and store locations, as well as advanced feature-based search capabilities,
and sorting and comparison tools that allow consumers to easily compare vehicles.
The site also includes features such as detailed vehicle reviews, payment calculators
and email alerts when new inventory arrives. Customers can contact sales consultants
in a variety of ways, including online via carmax.com. Customers can also schedule
appointments, hold a vehicle for up to seven days and initiate a vehicle transfer
using online tools. Our survey data indicates that approximately 80% of customers
who purchased a vehicle from us had first visited us online.
Overall company Market Share Q4 2022 |
Overall company, revenue fell by -23.71 % and company lost market share, to approximate 62.01 %.
<< More on KMX Market Share.
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*Market share is calculated based on total revenue.
KMX's vs. Competition, Data
(Revenue and Income for Trailing 12 Months, in Millions of $, except Employees)
COMPANY NAME |
MARKET CAP (in millions of $) |
REVENUES (in millions of $) |
INCOME (in millions of $) |
EMPLOYEES |
Carmax Inc |
KMX |
12,575.08 |
31,649.00 |
576.00 |
27,050 |
Autonation Inc |
AN |
7,707 |
26,870.30 |
1,478.10 |
24,000 |
Genuine Parts Co |
GPC |
24,265 |
21,375.53 |
1,186.72 |
55,000 |
Autozone Inc |
AZO |
48,004 |
16,568.39 |
2,413.69 |
100,000 |
O Reilly Automotive Inc |
ORLY |
51,449 |
14,056.86 |
2,163.05 |
82,167 |
Dorman Products Inc |
DORM |
3,207 |
1,630.64 |
137.79 |
1,846 |
Motorcar Parts Of America Inc |
MPAA |
296 |
662.25 |
-3.88 |
2,663 |
Standard Motor Products Inc |
SMP |
904 |
1,373.49 |
66.28 |
3,400 |
Lexagene Holdings inc |
TRUE |
529 |
81.43 |
-91.90 |
686 |
SUBTOTAL |
148,936.32 |
114,267.98 |
7,925.44 |
296,812 |
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