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Here’s Why CarMax Makes More Money On Used Cars Than Anyone Else | Jalopnik

A recent report by Automotive News shows just how much farther ahead of the field CarMax is compared to other major pre-owned retailers. In this first quarter of 2018, CarMax sold over 170,000 vehicles. In the number two spot, Penske Automotive sold over 73,000 cars. When it comes to gross profit per unit, on average, CarMax raked in $2,147 per vehicle. Lithia Motors wasn’t far behind at $2,038 while other dealer groups such as Asbury, Penske, AutoNation and Sonic had a profit range between $1,565 and $1,090. Startup Carvana only managed to average $902 per unit.

Now, what makes CarMax such a draw for used car buyers is excellent marketing that espouses a low-stress, hassle-free car buying experience. It also helps that it has tons of locations in major metro areas and customers have the ability to transfer most vehicles from one location to the next for a fee. This gives buyers access to a nationwide network of inventory. Of course, the crux of the CarMax strategy is the “no-haggle” pricing. The price you see is what you pay.

However, as I have mentioned before, the CarMax price may not always be the best one. Used car buying is very different than new car buying. The margin for negotiation is often in the hundreds of dollars and more major retailers are adopting similar “no-haggle” pricing policies, but unlike CarMax, other large used car dealers like Sonic and AutoNation are using market data to be aggressive with their used car prices in the hope that they move units quickly.

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Here’s Why CarMax Makes More Money On Used Cars Than Anyone Else.

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