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I’m a reporter with 25-plus years experience writing about, and working in, the auto industry. After a journalism degree at the University of North Carolina-Chapel Hill, where I was a Morehead Scholar, I started out with the dearly departed Nashville Banner, an evening newspaper. My beat included GM’s Saturn Corp. In then-rural Spring Hill, Tenn.
When the factory was still just a hole in the ground, plus the giant Nissan factory nearby. That turned into a post at Automotive News, the leading auto industry trade paper, as a one-man New York City bureau, covering European luxury brands, Wall Street, publicly traded dealer groups, retail auto finance and monthly auto sales. A four-year stint as market research and corporate strategy manager at Mercedes-Benz USA gave me an insider’s perspective. More recently, my freelance assignments have included Advertising Age, Automotive News, AutoWeek, Bankrate.com, Businessweek.com, CBS Interactive, The Financialist by Credit Suisse, ForbesAutos.com and Forbes.com. I am also the former Senior Editor for Auto Finance News in New York. The author is a Forbes contributor. The opinions expressed are those of the writer.
The nation’s largest used-car retailer, Inc., is piloting a it intends to roll out nationwide that would allow customers to skip visiting a dealership entirely, buy a car online, and have it delivered — although the company expects most people to continue coming to a dealership at some point in the process. “Customer expectations and behaviors are changing, and we want to be ahead of that,”, CarMax president and CEO, said in a phone interview. “Where we’re headed is where the market is going to head.” CarMax, based in Richmond, Va., is piloting what it calls its “omni-channel” system at its half-dozen locations in the Atlanta metro area. CarMax has a goal of rolling out the new system to a majority of its customers by February 2020, the end of its 2020 fiscal year.
31, the end of its latest, CarMax had 194 used-car stores — and two new-car franchises — in 93 markets. CarMax home delivery Today, most customers still want to come to a dealership to buy a car, Nash said.
For now there’s only a small percentage who would prefer never to visit a dealership, he said. But in between, he said there are a lot of customers who would like to transact more of the process online, and also have better, smoother access to CarMax customer service, especially when they switch back and forth between online and in-store.
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As an industry, auto retailing is behind the curve when it comes to transacting business online. In particular, when customers walk into a typical dealership, they often find they have to start all over again, even if they’ve already submitted their information, gotten pre-approval for financing, and picked out a car online. “It needs to be seamless,” Nash said. “When they go to the store, they expect the customer associates to know everything about them. We need to make sure that the store knows what the customer has done online, and what they have done at other CarMax stores,” he said. That sounds pretty basic, but the way most auto retailing is set up, an individual dealership competes with the dealership down the street. For new-car dealerships, their biggest rival is probably the same-brand store across town, which belongs to another dealer.
Financing is another hurdle to a smooth transition from online to in-store. The lender that provides a customer’s pre-approval online might not be a lender the dealership typically does business with. Once the customer gets to the dealership, the dealership may want the customer to start over so they can steer the customer into different financing that’s more profitable for the dealership, or a better deal for the customer, or conceivably both.
In that environment, it’s no wonder that the online channel may not share customer data with the bricks-and-mortar dealership and vice versa. It’s also not uncommon, even when data is shared, for dealerships simply to be poor at following up on online leads, in favor of people who walk in the door. Compared with independent dealerships, CarMax and other big retail automotive chains have a competitive advantage in that their stores aren’t set up to compete with each other in the same market. CarMax also offers its own financing, and it has partnerships with other lenders, so there’s also less likelihood of online vs. In-store conflict over financing.
It “doesn’t matter” to CarMax which CarMax store makes a sale, Nash said. What’s important is that a CarMax store makes the sale instead of another retailer. That may sound easy but, “It’s very difficult to do,” Nash said. RECOMMENDED BY FORBES.