CarMax Inc.’s wholesale auction arm just extended its reach.
CarMax Auctions is also mulling over allowing dealers that buy vehicles at its auctions in person to one day buy those vehicles online, said Fred Stark, CarMax assistant vice president of auction services.
“Simulcast is certainly something we’re interested in testing,” he said. “It’s not something we have as a nationwide experience, but it’s something we’re certainly looking into.”
But in the meantime, the nation’s largest retailer of used vehicles opened its 75th auction site in Fremont, Calif., on Aug. 15. The site also marks CarMax’s second auction in the San Francisco Bay Area, Stark said.
CarMax Auctions sites are located on the properties of its used-car stores.
Unlike traditional wholesale auctions, CarMax owns the vehicles it sells at its auctions, which aided its 95-percent sales rate in its last fiscal year that ended Feb. 28, 2018, Stark said.
Since the company doesn’t have consignors, it puts its focus on the buying experience, which makes CarMax Auctions an attractive place for dealers to source used-vehicle inventory, Stark said.
“We offer a fast and efficient auction process, and we have a wide selection of makes and models that range in year, mileage, condition, and we have several payment options,” said Stark.
“Our customers that are registered with CarMax Auctions can check out our website at carmaxauctions.com, three days prior to one of our auction events. That really allows them to research and do their homework ahead of time to identify vehicles they may want to bid on.”
Vehicles sold at CarMax Auctions on average are approximately 10 years old and have more than 100,000 miles on their odometers, said documents the company filed with the federal government.
Trade-ins, purchases from consumers
The vehicles for sale at CarMax Auctions don’t meet the company’s retail needs and standards, Stark said. They are primarily acquired from consumers under CarMax’s appraisal process and policy of buying used vehicles from consumers, even if sellers don’t buy vehicles from CarMax. Auction vehicles are also acquired as trade-ins.
“We may get some high-end luxury and sports cars on trade from time-to-time, and we’ll just put these in our auction,” he said. “That’s a nice added value for our customer base.”
CarMax also offers a lot of mainstream vehicles.
Though the auction is for licensed dealers only, carmaxauctions.com does allow the casual user a peek at its offerings by clicking on “Features of the week.”
In late August, “Features of the week” listed a wide range of vehicles for sale from a 2017 Honda Civic with 8,697 miles to a 2014 Dodge Charger with 92,941 miles to a 2011 Toyota RAV 4 with 73,699 miles.
Most CarMax Auctions run sales every week, Stark said. But a “handful” operate sales every other week and “a couple” hold monthly auctions, mostly “dictated by space and volume,” he added.
The four-lane, CarMax Auction in Murrieta, Calif., which opened in March, runs “upwards of 800” vehicles per week, Stark said.
“We have a lot of stores in Southern California, and those vehicles (taken as trade-ins or are purchased) in stores that don’t run an auction are transported to that facility,” he explained.
Vehicle history reports and more
CarMax Auctions provides free Experian Automotive AutoCheck vehicle history reports on its vehicles and make the reports available to registered dealers prior to the auction sale. Additionally, CarMax Auctions discloses when vehicles offered for sale have major mechanical issues and/or title brands that reveal flood damage. Title brands also disclose when a vehicle has been rebuilt or declared salvage.
The company has an arbitration policy in place for all vehicles it sells regardless of the year, make, mileage or cost, Stark said.
For example, if a customer spends $1,000 on a vehicle that has a transmission problem that was overlooked, “We help them through an adjustment process or we just take the car back,” he said. “We are going to do what’s right.”
In its first fiscal quarter that ended May 31, CarMax’s wholesale vehicle unit sales increased 9.6 percent to 113,335, compared to the year-ago fiscal quarter, the company said in its June 22, quarterly earnings report.
Wholesale unit sales were largely driven by an increase in CarMax’s appraisal and buy rate of vehicles from consumers and growth of its store base, the company said.
CarMax’s wholesale gross profit per unit was unchanged at $1,012 in the fiscal quarter, and the average selling price of its wholesale units rose 1.8 percent to $5,205.
CarMax opened its 194th used-car store last week, in Norman, Okla.