In the early 1990s, seeking to find a new retail opportunity, Circuit City CEO Richard Sharp and Vice President of Corporate Planning Austin Ligon developed the concept for CarMax. In December of 1991 the Circuit City made a wise investment of $50 million to fund the concept.
The first CarMax store was opened in Richmond in September of 1993. The first sale was a 1993 Jeep Grand Cherokee. By 1996 Car Max announces plans to open 80 to 90 stores nationwide. Adding to that was the launch of CarMax.com which allows customers to search through the entire Car Max inventory.
The company lives and operates by five basic principles:
- We offer tens of thousands of used cars across the country
- Every car we sell has a low, no-haggle price
- Our vehicles are superior in quality. Only the best cars meet our high standards
- We’ll buy your car whether you buy from us or not
- You’ll get friendly customer service
And it works. Ten years after Sharp and Ligon first dreamed of the concept, the company posted their first annual profit of $1.1 million. CarMax owes much of its success to simply providing customers what they want: an easy shopping experience to get a good car at a good price.
CarMax says they are the smart choice for buying a car, offering thousands of vehicles for under $12,000. Key to their selling method is posting the price right the car. No negotiating, no hidden charges. And they’re willing to work with a number of financial institutions to get the best option for prospective buyers.
Car Max invests back into the community. They recently announced a $45,000 grant to the Enrichmond Foundation for the fourth season of the CarMax Summer Basketball League.
Even with a struggling economy, Car Max reported that this spring they sold more cars and at higher prices. According to the Richmond Times Dispatch, “CarMax CEO Tom Folliard attributed the spike in wholesale sales to fewer cars on the market.”
Still at a meeting earlier this week Folliard told shareholders. “I still think we’re in for a little bit of a rough road. Although we see some positive signs in the economy, I personally feel it’s going to be a slow burn.”
Today, CarMax has 100 stores across the country. They’re ranked as a FORTUNE® 500 company and and have been named one of FORTUNE® magazine’s “Best Companies to Work For” six years in a row. Since that first sale in 1993 they’ve sold more than 2 million cars.
It seems that at least 2 million buyers agree that this is a better way to buy a car.
And, while the parent company of Circuit City declared bankruptcy and closed their doors last year, CarMax appears poised to remain strong and even rebound when the economy recovers.
But perhaps they’ve made enough of a name for themselves now that they’ll be even stronger in the future. It might just be that this downturn in the economy has convinced consumers that the shiny new car they want doesn’t have to brand new.
When they make that decision, CarMax has a good car, at a good price.
Thousands of them in fact.
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