DETROIT -

The nation’s largest retailer of used vehicles is a serious contender in the retail race to allow consumers to skip the dealership to buy, finance and arrange home delivery of vehicles.

CarMax is supporting the expansion of its omnichannel sales experience — which describes buying a car online, by phone, text or email, in-store or a seamless combination of those methods — with the opening of three customer experience centers in its fiscal year that ends Feb. 29, 2020, said CarMax chief executive officer Bill Nash.

Customer experience center associates will assist customers with car shopping and financing until the customer takes delivery of their vehicle at a CarMax store or at their home or workplace, the company said.

The first center is planned for metropolitan Atlanta and is to open early in the company’s second fiscal quarter which started June 1, Nash said. A second center will open in July in Olathe, Kan., near Kansas City, the company said. Details of the third center opening had not been announced by late May.

CarMax began piloting omnichannel sales in its Atlanta market in December and expects the new-sales experience to be available to the majority of its customers by the end of February 2020.

Customer experience centers will serve multiple states, and the Atlanta location will support the next phase of the omnichannel rollout which will include CarMax stores in Florida, Nash said.

He cited CarMax “strengths” such as its skilled associates, national footprint and inventory scale and its technology and digital capabilities as essential to its omnichannel sales experience.

 “These strengths are not only critical, but essential to delivering an omni-experience, an experience that’s tailored to every single customer, an experience that is unmatched and we believe will be the future of car buying,” said Nash during CarMax’s fiscal fourth quarter earnings conference call on March 29. CarMax’s previous fiscal year ended Feb. 28, 2019.

300 associates at each CEC

Each CarMax customer experience center is to employ an average of 300 CarMax associates.

In conjunction with the omnichannel launch, CarMax added new elements such as an increase in free vehicle transfers, a new website, a new ad campaign and pricing tests, said Nash.

The conversion rate on home delivered vehicles in the Atlanta market is high, but represents a “very small percentage of overall sales at this point,” Nash said.

Though the finance penetration for vehicles purchased through home delivery is similar to vehicles purchased at CarMax stores in the Atlanta market, the take rate for Max Care extended service plans is “a little lower,” he said.

As a result of “inefficiencies” associated with starting new capabilities such as the omnichannel rollout, sales in CarMax’s Atlanta market “at this point” are less profitable per unit compared with other markets, Nash said.

“We do believe that we will be able to improve on this as we continue to roll out omnichannel and as our consumer experience matures,” he said. “We also believe this unique experience could be more efficient than our current model.”

Largest used-vehicle retailer by far

Based on an examination of 2018 sales results from the nation’s publicly traded auto retailers, CarMax is, by far, the largest for used vehicles.

For its fiscal year that ended Feb. 28, 2019, the company’s retail used unit sales rose 3.8% to 748,961, and its wholesale unit sales were up 9.5% to 447,491.

Also in the fiscal year, overall net earnings increased 26.8% to $842.4 million on net sales and operating revenue rose 6.1% to $18.17 billion.

CarMax closed its fiscal year with 203 used-car stores, opened a store in its Memphis, Tenn., market in March and plans to open a dozen more by the end of February 2020, the company said.

Stores to open in these cities represent new CarMax markets: Texas cities of Killen, Pharr and Lubbock; Palm Desert, Calif.; Gulfport, Miss.; and Fort Wayne, Ind.

Stores planned for these cities will be in markets in which CarMax already has stores: Scottsdale, Ariz.; Pleasant Hill, Calif.; Bogart, Ga.; Salem, Ore.; Murfreesboro, Tenn.; and Denton, Texas.

In last quarter of the fiscal year, CarMax’s retail used unit sales were up 5.6% to 180,207, and its wholesale unit sales climbed 3.7% to 102,887.

For the quarter, overall net earnings at CarMax increased 57.6% to $192.6 million on overall net sales and operating revenue that rose 5.7% to $4.32 billion.

Same-store used unit sales in the last fiscal quarter rose 2.8% driven by improved conversion and partially offset by lower store traffic. Also in the quarter, same-store used vehicle revenue grew 3.0%, company documents said.

For the fiscal year, same store unit sales rose 0.3%, and used unit revenue was up 1.9%.

CarMax tracks market share on a calendar year basis and reported that its share of same-store sales of vehicles up to 10 years old in calendar year 2018 fell to 4.4% from 4.5% in calendar year 2017.

“While this is disappointing, the decrease in share occurred earlier in the year and started to reverse in the second half of the year when we saw share gains,” Nash said.

CarMax Auto Finance

In the fiscal quarter, CarMax’s finance arm, CarMax Auto Finance, reported income that rose 2.6% to $103.7 million, which reflected the net effect of a 7.8%  increase in average managed receivables and a slightly lower total interest margin percentage, the company said.

For the fiscal year, CAF’s income increased 4.2% to $438.7 million.

After the effect of three-day payoffs and vehicle returns, CAF financed 43.2% of CarMax’s retail used unit sales in fiscal 2019. As of Feb. 28, 2019, the finance arm serviced approximately 966,000 customer accounts in its $12.51 billion portfolio of managed receivables.