To the average consumer, CarMax is best known as a used-car retailer.

But for the last three decades, the company also has had a thriving wholesale operation — and it’s one that has proven mutually beneficial for the retail side of the business, opened unique data sets and created avenues for business opportunities with traditional dealerships.

And now CarMax Auctions is being recognized as Cherokee Media Group’s 2025 Auction Group of the Year, an award sponsored by Kinetic Advantage.

CarMax Auctions will be recognized in person at Used Car Week, which is Nov. 17-20 at Red Rock in Las Vegas.

Auto Remarketing caught up with CarMax vice president of merchandising operations David Unice in late September to talk about the company’s wholesale strategy, what make CarMax Auctions different than traditional auctions, how wholesale and retail operations have complemented each other, plus much more.

Retail and wholesale used cars: Mutually beneficial

The CarMax retail store a consumer sees and the B2B wholesale auction operations are “certainly linked pretty tightly,” Unice said.

“A significant portion of customers who buy cars from us also sell us a car, and then the reverse is true: Customers who come in with the intent to sell also end up buying,” he said. “We have the really good channels to sell all cars, meaning that we take the retail cars to our retail business, and our wholesale operations enable us to  efficiently and profitably dispose of vehicles we purchase that don’t meet the retail criteria.

“So as a result, the business model creates this cycle where sometimes retail sales lead to wholesale sales, and similarly on the other side, sometimes vehicles we buy for our wholesale operations lead to retail sales.”

Another perk: internally sourced market data in real time.

Because they’re running CarMax Auctions sales so frequently, they have access to up-to-date data on market conditions, Unice said, without having to buy valuation data from third parties.

“For instance, when valuations are climbing, we’re one of the first to be able to recognize the trend and raise our offers,” Unice said, “And what that means to our auction customers is that that enables us to buy more vehicles, which helps us sell more vehicles to them.”

The way in which the wholesale and retail operations “intertwine” has also allowed CarMax to offer dealers a product like MaxOffer, which is described on its website as a “free dealer-only appraisal tool (that) provides firm offers on any car, allows you to sell without fees, and see verified CarMax offers on any car.”

The digital shift  

Roughly a handful of years ago, CarMax Auctions switched its sales format to entirely digital/online after 25 years of physical sales.

The change was admittedly “sudden,” Unice said, but has offered dealers more flexibility and remote access. And it wasn’t a decision made purely by gut instinct.

“We try to provide the information they need that if they want to preview remotely through their computers or phones, they can do that. We also give kind of the best of both worlds where we do have in-person preview times,” Unice said

“If they want to come and touch the cars, they’re more than welcome to do that,” he said. “And it wasn’t an assumption we made. We’ve continued over the past five years to (gather feedback), whether it’s surveys or it’s even operational tests where we do offer both online and in-person bidding experience

“And what we found through the tests and the surveys is that we’re getting pretty consistent feedback from our dealer customers that the digital experience is what they’re looking for,” Unice said. “Overall, it saves them significant time and often travel expenses as well.”

And dealers can tap into CarMax Auctions inventory from any location across the country.

“We do have over 50 locations, but I think of it as really one kind of uniform offering to our dealers. We try to make it super easy for them, even if they see a car they’re interested in and it happens to be in a market they maybe don’t have transportation connections with, we have it embedded in our website that they can go use the integrated transportation solution,” he said.

CarMax Auctions partners, with a third-party service provider to offer the transportation solution.

AI to improve operations & customer experience

It’s a topic that comes up at almost every auto industry conference: the use cases for artificial intelligence.

For CarMax Auctions, that manifests itself in a couple ways.

“The first one that has been in place for a while is the use of AI to help us in our acquisition strategies … the reason that’s important for the auction businesses is that the way we acquire cars fuels the inventory that we’re able to offer to our dealer customers. So, AI has been a part and will continue to be a part of that solution,” Unice said.

The second avenue is a newer one, but Unice believes it will continue to grow in importance. And that’s the use of AI to improve the dealer customer experience.

“We’re testing AI to produce automated damage disclosures through photos. So instead of just looking at a photo and needing to determine, ‘Is that a dent? Is that a scratch?’ and zooming in, it’s through AI (to) give automated call-outs to say, ‘There’s damage here. This is exactly what it is,’” he said.

Laser focus on dealer customers at auction

CarMax Auctions owns all of its inventory and does not have third-party sellers, which is different from the model of a traditional auto auction.

Unice said this approach allows the company to be “focused 100% on the dealer buyer’s needs” and gives CarMax Auctions “direct control over the process,” helping it “ensures the high integrity experience,” he said.

The sales rate at CarMax Auctions is above 95%, Unice said, and “through disclosures, we empower our dealers to bid with confidence.”

They offer high-resolution photos, condition disclosures and a seven-day arbitration policy that applies to every vehicle, no matter the age or mileage.

“Because we’re the seller,” Unice said, “we just have a relentless focus on the needs of the auction buyer.”

Steady supply stream

Another topic that’s top-of-mind in automotive: the slowdown in used-car supply, stemming from drops in off-lease volumes and new-car production issues from prior years.

For CarMax, though, it “hasn’t really been an issue,” Unice said.

“And one of the reasons for that is that we’re relatively unique in that the primary vehicle source for us is coming directly from consumers and more recently from dealers,” he said.

Unice said more than 70% of CarMax’s retail sales is from vehicles that it buys from retail customers.

“A common practice in the industry is that dealers get a lot of their purchases from auctions. And I think that’s where the news of the supply issues has materialized. On top of the 70% of cars that we get directly from retail consumers, the introduction of the MaxOffer (platform) … has allowed us to open up another channel, where we’re purchasing over a hundred thousand cars a year directly from our dealer partners.”

Asked about what’s in store for CarMax Auctions and potential ventures for the future, Unice said, “I see what we’re headed towards and what we’re really already providing today is that we view ourselves as a total partner for our dealers,” where CarMax Auctions acts as a source of vehicles for dealers, with MaxOffer “providing a way to dispose of cars,” he said.

And those services could “start to blend,” Unice said, giving the example of a service CarMax was testing with MaxOffer.

“The MaxOffer program is essentially a firm offer to buy the car from the dealer,” he said. “What we’re testing is giving the dealer an option to say, ‘I see the firm offer and I love it, but I’d actually like to let that car run in your auction. That’s the way I’d like to get paid for this car.’

“So, we’re bringing the services we have on the buying side and the selling side. And I think it will blend, so that again, it’s a full-service partnership,” Unice said. “And I’m hoping that it extends beyond even buying and selling into other services that we may be able to be that total partner for our dealer customers.”