In addition to announcing that dealers can now register for its sales online, CarMax Auctions recently shared plans to add five locations in fiscal-year 2017, including one this summer that will be its first in the San Francisco Bay area.  

The five new locations include:

• Pleasanton, Calif.  (Set to begin this summer)
• El Paso, Texas (Also beginning this summer, following Pleasanton)
• Boise, Idaho (fall)
• Grand Rapids, Mich. (winter 2017)
• Murrieta, Calif. (end of fiscal 2017)

To get a sense of how a CarMax Auction works, Auto Remarketing talked to Fred Stark, CarMax’s assistant vice president of auction services, earlier this month.

As of Feb. 29 (the end of its 2016 fiscal year), CarMax sold wholesale vehicles in 67 of its 158 stores. Each CarMax Auctions sale is in a live, open-bidding format and held at a brick-and-mortar CarMax store, Stark said.

These 67 CarMax Auctions locations sold a grand total of 394,437 wholesale units in fiscal 2016.

The individual sales run on a weekly or biweekly basis, depending on the locations. There are CarMax Auction sales going on each weekday.

Auctions are dealer-only and buyers must be signed up as a registered representative of a licensed dealership, Stark said. Typically, most dealers at the sales are independents, though from time to time there are franchised stores buying cars for their used-car business, he said.

Usually, the auctions are operated at its larger “production” stores, where there is more room than the satellite locations.

CarMax owns all of the vehicles being sold at its auctions.

These units typically are vehicles that don’t meet the company’s retail standards, so CarMax Auctions sells them wholesale.

The fact that CarMax owns all the vehicles being sold at its auctions helps generate a high sales rate, Stark said. In fact, CarMax Auctions hit a 97 percent average auction sales rate in fiscal-year 2016.

 “We also make conditional announcement on these vehicles. Since we own every vehicle and we’ve appraised them, we’ve driven them down the road, we’re able to identify major mechanical concerns, frame damage, flood damage,” Stark said. “We also make any conditional announcements on branded and salvage titles.”

CarMax Auctions provides free AutoCheck reports through its website, which Stark said allows customers to “do their homework before they come to the auction.”

There is also an arbitration process

“The thing that’s really different with us is, if we sell a vehicle in our auction that is 25 years old, and we don’t disclose a major mechanical issue and a customer pays $500 for it, if we miss that, they can still arbitrate that under our guidelines, which is quite unique in the industry,” Stark said.  

Again, since CarMax owns all the cars being sold at the auction, there are no consignors. All of the vehicles are via retail customer trade-ins. Dealers cannot sell cars at CarMax Auctions.

The typical car being sold is roughly 10 years old and has more than 100,000 miles on the odometer. However, Stark said, the auctions sometimes feature high-end luxury sports cars that CarMax chooses not to retail.

“This isn’t just a sale that has a whole bunch of CarMax reject cars that we just don’t want, that are bad cars; there’s also some very unique vehicles out there that high-end luxury dealerships are also sourcing at our auctions,” he said.

More details regarding online registration

CarMax Auctions based the online registration option on feedback from customers, who asked the company for a “simple and seamless experience that included a hassle-free registration process,” Stark said.

“That was really the missing link that we had. We’ve had our website out there for years, with pictures and the free AutoCheck and conditional announcements; but the online application at CarMaxAuctions.com is super user-friendly and it eliminates the need for paperwork and fax machines,” he said.

“Essentially, our customers can just point and click at their desktop in their office or they can even use their smartphone these days to register and add buyers to their dealership when they come and buy from us.”

Another key benefit: when members of Stark’s team are in the field visiting customers, they no longer have to talk paperwork.

“We can really connect with the customers and build the partnership more efficiently and not talk about a whole bunch of missing paperwork,” he said.