By on July 7, 2011

 

Have you ever been to an auto auction? Some may consider an auctioneer to be a ‘carny’. He talks at over 200 mph. Mumbling what appears to be nothing more than gibberish and random numbers.

But if you added all the sales up by those supposed hucksters, you would soon realize that only Wall Street and Walmart sell more goods over the course of a year. Over ten million cars are bought and sold at auctions by these professionals. Hundreds of thousands of dealers have access to the vehicles. With all that free market competition taking place, Carmax is just one of many dealers that must compete for all those cars.

Can Carmax offer a ‘good value’ compared to all that competition?

The fairest way to look at this is to compare apples to apples. Ebay is a godsend in this respect. Their online auction marketplace offers the products of thousands of dealers and with a ‘completed items’ section, it’s fairly easy to match and pair similar products that Carmax offers  with ones from online dealers that have strong positive feedback.

So let’s compare…

 

Ebay (96+% positive feedback) Carmax
2008 Chrysler Town & Country Touring 2008 Chrysler Town & Country Touring
53k Miles : $17,480 53k  miles : $21,599
VIN# 2A4RR5D13AR493039 VIN# 2A8HR54P98R737110
2010 Toyota Camry LE 2010 Toyota Camry LE
6k Miles: $18,500 10k Miles: $21,147
VIN# 4T4BF3EK8AR052894 VIN# 4T1BF3EK8AU058026
2008 Chevy Silverado Crew Cab 4×4 Z71
2008 Chevy Silverado Crew Cab 4×4 Z71
61k Miles: $21,780 69k Miles : $23,998
VIN# 2GCEK13C681142333 VIN# 3GCEK133X8G184284
2007 Nissan Murano SL 2007 Nissan Murano SL
46k Miles: $21,480 46k Miles: 24,998
VIN# JN8AZ08T57W506251 VIN# JN8AZ08W87W662259
2008 Cadillac Escalade EXT 2008 Cadillac Escalade EXT
26k Miles: $39,478 26k Miles : $41,998
VIN# 3GYFK62848G198870 VIN# 1GYFK63898R270953
2007 Toyota Tundra 2dr Reg Cab 2007 Toyota Tundra 2dr Reg Cab
45k Miles: $15,473 44k Miles: $18,147
VIN# 5TFJV52167X002345 VIN# 5TFJV52137X001766
2006 Chevrolet Cobalt LS 2006 Chevy Cobalt LS
55k Miles : $7,105 49k miles: $11,988
VIN# 1G1AL15F167823351 VIN# 1G1AK55F767865131
2003 Chevrolet S10 LS Ext Cab 2002 Chevrolet S10 LS Ext Cab
32k Miles: $8,805 59k Miles: $11,748
VIN# 1GCCS19X038102904 VIN# 1GCCS19W628142300
2003 Mercedes-Benz E320 2003 Mercedes-Benz E320
60k Miles: $15,480 70k Miles: $17,147
VIN# WDBUF70J03A132576 VIN# WDBUF65J93A194478
2007 Ford Explorer XLT 2002 Ford Explorer XLT
87k Miles: $9,500 90k Miles : $11,147
VIN# 1FMEU73E27UA84069 VIN# 1FMZU73E92ZC28780

This wasn’t surprising. To be blunt about it, Carmax has to pay a lot of middlemen. They have a fully staffed corporate office, over ten thousand employees and $4 billion in long-term debt. Between the shareholders, executives, bondholders, employees, and contractors, there is a lot of margin that needs to be made on each one of their cars.

An online seller doesn’t have anywhere near this expense. Since virtually all dealer auto auctions cater to independent used car dealers, the barriers to buying the same cars as seen above is between small and non-existent.

Carmax can acquire some vehicles in ‘closed sales’ where the manufacturer will restrict purchases to new car dealers. However these opportunities are very few and far between and most Carmax dealerships have no new car franchise.. As shown by some of Ebays larger sellers, you can generally get the same type of vehicle without having to pay a healthy four-figured premium.

Does Carmax have some advantages? Absolutely. You typically don’t have to wait as long to buy your car. Like any brick and mortar dealership, you also have an extensive number of vehicles to check out and test drive beforehand. A lot of folks like to kick the tires first before buying anything. Carmax does offer that luxury along with the assurance of a 5 day money back guarantees and a 30 day ‘Limited’ warranty.

But there is also nothing stopping the same customer from test driving a vehicle at a local dealership and then buying it online for thousands less. This is where Carmax falls short. For those who already know what they want and are patient with the buying process, online dealers are the way to go. Many of the vehicles that are sold by Carmax already have manufacturer warranties that far eclipse the 30 day ‘Limited’ warranty. So the assurance of this restrictive warranty is usually minimal at best.

Unless you need it right now, the large scale online dealer will usually have the better deal.

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45 Comments on “Carmax: A good value?...”


  • avatar
    Omnifan

    The savings are about right. I saved $3000 buying on eBay vs the local dealers. My car had less miles than the dealers’ car and had two full years left on the factory warranty. Only drawback was traveling 1200 miles to pick it up. Yes, you do have to be patient and wait for the right deal. I’d do it again.

  • avatar

    There was a recent probe into Ohio State University football players & family members receiving special deals on cars at local car dealers. 24 out of the 25 deals made the dealerships money, with the 1 loss purported to be because “the car had been on the lot for 150 days.”

    From this article, the twelfth paragraph:

    “A BMV investigator found vehicles bought at Auto Direct were sold for an average of $2,000 over their wholesale purchase prices, the report said. ”

    Here’s a link to the full article http://www.cbssports.com/collegefootball/story/15252823/ohio-st-scraps-car-sales-probe-after-bmv-dealers-reports/rss

    So an average dealership profit of around $2000 over wholesale, sounds about right for a non-buy-here-pay-here lot.

  • avatar
    dwford

    A used car at a new car dealership has a lot of built in costs that inflate the price above wholesale. Here is an example:

    2011 Hyundai Sonata GLS – 20k miles – former rental

    original MSRP: approx $21,000

    Auction price: $17,500
    transportation from auction: +$300
    Hyundai certification: +$495
    shop costs: +$600 (it shouldn’t need more)
    Pack: +$700 (“protection against commission” – the amount the dealer owner “adds” to the cost of the vehicle that the salesman doesn’t get paid commission on -aka built in profit)
    Total cost: $19,595

    Add your “$2000 average profit” and we are at $21,595 – or over MSRP of a new Sonata. Oops!

    In reality, we sell something like this for $19,995 (or less) and get the financing to make the profit. The customer thinks we are overcharging by selling for so close to original MSRP and we complain that we made no profit on the deal.

    • 0 avatar
      John Horner

      Why does anyone buy a 20k mile used Sonata for only two grand less than the original MSRP? In general, popular late model used cars are mostly a bad deal these days.

      • 0 avatar
        dwford

        When the new car is in short supply and selling at or above MSRP, then saving a only a couple $thousand might make sense. Honda dealers have been selling used Hondas for sky high prices for years. If you expect the car to continue to hold its value, then paying a high price for a used model seems like an ok plan. I agree, though. I would just spring for the new one.

    • 0 avatar
      friedclams

      As always dwford your insights are much appreciated, that explains a lot.

  • avatar
    vww12

    Great article, thanks.

  • avatar
    MrBostn

    Nice write up. I’m looking for a new (or new to me) CR-V and the used ones cost so damn close to the new ones. Drives me crazy.

  • avatar
    NormSV650

    EBay rules with rock bottom pricing. But as mentioned the distance and unknown when buying from someone with a 90% selling rating. The live auction does have nice price point repossessed stuff that some throw a couple of bucks at and rent.

    I drive mine 40,000 miles annually so new car is out of the question. I did pick up a small sport bike one year off of eBay with 4500 miles and one year old for half price of new. Later found the owner online and the bank had taken it.

  • avatar
    cdotson

    I noticed years ago that Carmax is priced head and shoulders above any other used car outlet. I always wondered how they managed to make a successful business out of doing this as I cannot conceive of how the services they provide make the price premium worthwhile. I was discussing this at work one day and a coworker commented that he thought Carmax had worked some kind of deal with major banks that qualified Carmax vehicles for no-questions-asked financing at the asking price. He had been at one of their lots in Richmond looking at a car for his wife and called his bank to ask what their financing would look like on the car. They asked him if he was at Carmax and told him he would be approved and gave him the terms over the phone. He didn’t buy the car because he thought it was too expensive and the easy credit approval, almost without asking, spooked him a little.

    • 0 avatar
      Flybrian

      Carmax’s captive finance arm charges 22-28% interest for subprime customers, same as everyone else.

      Since a good friend of mine started working at a local CarMax, its confirmed what I used to generally suspect about the outfit – they do the same thing every other independent does, just on a grander scale with a much prettier wrapping.

    • 0 avatar
      Matthew Sullivan

      @cdotson:

      I’m a former CarMax customer, so I’ll give you my take.

      CarMax survives because the typical automobile dealer experience is so tremendously heinous.

      My Tale
      In late 2003 I decided I needed to go test drive one of these new “Evos” all the car magazines were raving about. So I head over to the Mitsubishi dealership nearest me here in Houston. All the cars were priced thousands *above* sticker, with ridiculous over-priced add-ons like VIN-etching in the window glass and straight up “market adjustments”.

      So I went to another Mitsubishi dealer. No markups on the sticker. I sat in a car and it was ergonomically perfect. I *had* to drive it. Talked to a sales guy and he said I could only drive it AFTER I had signed a contract to buy it. (I am not making this up.) I was not some backwards hat-wearing kid walking in for a joyride. I was in my late 30′s, drove up in a paid-for Maxima, and was dressed in business casual. I left disgusted.

      Several months later, in early 2004 I saw my first Evo on the road during my morning commute. Later in the week I saw my second one. I figured it was a sign from God. I got on the CarMax website and saw that the CarMax nearest me had one in my preferred color with “both” factory options (wing and sunroof).

      So I daydreamed about the car all the next day during work, and then ran over to CarMax. A young guy pounced on me as soon as I walked through the door and asked whether he could help me. I said, a little tentatively, “Well, I saw an Evo on your website…” He smiles a big smile and says, “The silver one?” I said, “Yeah!” He says, “Let’s go drive it!”

      I drove the car home that evening.

      • 0 avatar
        flashburn

        In other words, you don’t care that much about price when you’re daydreaming about a car and as long as they’re not a dysfunctional dealer you’ll unwittingly give them $2-5k over what you could get a car for if you spend a few days looking at private party deals.

        For other people, they provide no useful service and that 2-5 thousand is the gateway to a better car.

      • 0 avatar
        Acc azda atch

        flashburn:

        Funny you said that.
        I agree with you completely.

        Honestly..
        I hate the fuckin Maxima.
        There hasn’t been one made in 10yrs (since the anniv. in dark blue with trim) that made me giggle like a little girl.

        The EVO I think its absolutely gutless. I’m sure its got power out the ass and all of the looks to show for it.
        SILVER PAINT = Primer SAYS NOTHING. It says generic.

        I actually tried to buy the relative = Mitsu Sportback (quite recently) and was ABSOLUTELY REPULSED at the shit black CLOTH interior. It had a beautiful blue body with the perfect hatch. I would have ignored so much.. to get the hatch.

        But between my distaste of Mitsu in general, the #*@&@&!* black CLOTH interior, the general #(@&@^! of the interior.. I couldn’t ever buy it.

        Honestly..
        I think its too easy to have satisfied this guy.

        Ya want a challenge??
        Go online and look for a Mazda3hatch or the turbo version = Mazdaspeed3.

        If ya find 100 Mazda3′s 90% are sedans.
        Ya got 10 cars that are the hatches..
        About 5 are painted in the Red or Blue.
        Half of those have the tan cloth interior with the manual, no power seats, leather or nav.

        Put up a fight at least with a car that is somewhat rare.

  • avatar
    PintoFan

    I don’t think I could ever be comfortable spending that kind of money in an online transaction, sight unseen, even for a brand-new car. I’m not afraid of technology, but even if you go with a power seller there’s no real guarantee you won’t get burned. I understand that there are those risks implicit in traditional dealerships as well, but at least there’s some measure of accountability beyond a little status bar with a percentage rating. Brick and mortar dealerships have more of an incentive to maintain good customer relationships because they can’t run away from bad publicity as easily.

    • 0 avatar
      Flybrian

      That’s what I always tell customers also looking at a private party or private online car – “At the very least, you can come back and yell at me, my partner, and the salesman and you know we’ll probably be here.”

      Small independants MUST have a good reputation nowadays. I know I won’t do business otherwise. A private owner doesn’t care if it blows up on you the next day or not and, yes, even your fellow citizen will rig things up and not tell you, especially with cheaper cars. Go look on Craigslist and see how many Cadillacs you see the “overheats but it just needs a water pump that I can’t afford.”

      Riiiiiight….

      • 0 avatar
        krhodes1

        But if you are paying real money for a car you are buying one that is still under warranty. Thus any issues are the manufacturers dilemma, not the sellers. Hassle factor aside, of course.

        I certainly would not spend $10K+ on a car without a factory warranty. But I have bought TONS of “mature” Saabs, BMWs and Volvos from eBay with nary a hitch. Most recently my much-loved 212K mile ’95 Volvo 945 for $1425. But I can fix that car myself for peanuts.

    • 0 avatar
      LectroByte

      Yeah, I never understood the appeal of buying something as major as a car sight unseen from an online auction. A new one, perhaps, but a used one? There’s so much you can’t tell about a car from looking at pictures at it over the internet.

      • 0 avatar
        slance66

        Agreed. I’ll never buy a car I haven’t driven. I’ve seen too much variability in cars with similar histories, mileage, remaining warranty etc. in off-lease vehicles. I had a certifed used Volvo that was certainly never certified, or likely even looked at, by the dealer. An Rx350 that is mechanically fine, but just doesn’t drive/steer as well as others, even after the dealer tried to correct it. My latest 328xi was CPO and is solid as a rock. I dismissed two others on the same lot, as they just didn’t feel right.

        I’m no mechanic, but at this point, if anything feels off at all I won’t buy it. So eBay just seems like even more of a crapshoot.

        Carmax is pretty hostile to informed buyers. They’re also quite hostile to test drives. My local outlet won’t allow test drives on the weekend, that’s “selling time”.

      • 0 avatar
        threeer

        @ slance…interesting…I’ve never, ever had an issue going to the local Carmax to look at as many cars as my heart desired! And the local guy I deal with knows I’m not in a position to buy that Jaguar or CLS I test drove, but is more than happy to let me spin the wheel, anyway.

        Yeah, Carmax is more likely than not to be higher priced, but for a fair number of people, it’s worth it to avoid the immense pain associated with making a car purchase. And for quite a few people, buying via internet without actually test driving invokes more stress and risk than they are willing to take, even if they do save money.

    • 0 avatar
      flashburn

      That’s what I don’t get. How can anyone recommend buying a car off ebay without going to see it first?

      Step 1. see it on ebay and arrange a in-person meeting
      step 2. Test drive it and inspect it inside and out
      step 3. Negotiate the price and buy it. Seller de-lists it.

  • avatar
    obbop

    Interesting article.

    I am seeing more vehicles parked alongside major local arterial roads with what appear to be reasonable prices lathered upon the windows.

    Some of the prices also seem to be in my unpracticed in this area opinion to actually be reasonable or less, adding to my guess that desperate folks are attempting to sell.

    But!!!! If local dealerships are desperate for used vehicles to sell, as some are mentioning in their local advertising, and begging the masses to bring in their used vehicles I wonder if that babbling is actually true then if those displayed vehicles may be akin to the typical female I meet; possessing “issues.”

    Or, perhaps the local dealers do not so much need used vehicles as warm bodies to enter the lot so as to assist in the fleecing errrr selling of new vehicles to those without the ability to scamper away, defending their likely meager savings and non-rising incomes and, within this area, likely ever-decreasing “real income” and ever-increasing cost of living.

    Heck, my mere possessing of a paid-for shanty despite its extreme humbleness and location within a rougher section of a town where brawn and an ever-present scowl assists in keeping the trashy element away has led to an awareness of the local impact of the ongoing economic crisis facing the bottom of the socio-economic hierarchy.

    So desperate are locals that a well-dressed Old Coot signing up for a few maybe helpful job-securing classes at the local junior college was confronted by several extremely interested females of a tender age; eeeeek late teens to early 20s!!!!!!!!!

    Or they want to defraud me or drug me then steal my money when the opportunity arises. But that is another topic I will just avoid by remaining a disgusting Old Coot hiding from a sick society in my shanty with its wondrous “super closet.”

    Hey!!!!! Perhaps I should wield the new-fangled pickshure-taker and stop and at those for-sale-vehicles and post over at that Cars-in-Depth site so y’all can ponder the prices.

    This section of the USA is unique in several ways; none of them all that good except for the low living costs.

    Before any of y’all ponder moving here either bring enough money to isolate yourselves from the riff-raff via economics or learn how to repel the local vermin using various methods or just walk around toting a 12-gauge upon yer shoulder.

  • avatar
    NN

    great information

  • avatar
    Educator(of teachers)Dan

    Once again Mr. Lang is teaching and I am greatful that I showed up for class.

  • avatar
    jaje

    Carmax is useful to me. When I want to sell my private car I go there and get a trade in offer. Then I go back home and put it on Craigslist for $2-$3k higher offer then negotiate with the buyer from there. I wind up getting $1.5k-$2k more than Carmax (or any other dealer) would give me.

    eBay can get you some cheap deals but you are usually buying it sight unseen. With used cars I’d always recommend a pre purchase inspection (PPI) by a mechanic local to the seller. In fact all the offers I make for a used car will be contingent upon a satisfactory PPI (this is an expense I pay out of my own pocket). You can state in eBay this clause and use it to back out if the seller won’t bring the car over to get an inspection or if the car has issues that were not stated in the auction then I back out of the deal and have legitimate reasoning to do so.

  • avatar
    Junebug

    obbop – we must be kin somewhere down the line. Are you one of my cousins down in South Cacky-lacky?

    • 0 avatar
      obbop

      “obbop – we must be kin somewhere down the line. Are you one of my cousins down in South Cacky-lacky?”

      My clan has roots in the north with nary any Southern tendencies other than an impoverished lower-class background.

      Many of the kinfolk have emigrated to the southern tier due to jobs, etc. but the “cult of Yankeeness” is embedded within them.

  • avatar
    John Horner

    This big news just in: Private party sales of automobiles go for thousands less than sales through large reputable dealerships. Oh wait, that isn’t news at all.

    People who buy from large dealerships do so for the selection, the availability of trade-in and finance services, the reconditioning they expect a dealer to do before putting a car on the front line and the security of having some recourse if there is a problem.

    As a general rule of thumb, private party sales prices end up somewhere between trade-in value and dealer resale pricing. It has been that way for decades. Nearly everyone knows this and behaves accordingly depending upon their own situation and preferences. “Large scale online dealers” are much more like private parties than they are like established physical dealerships. Buying a car on eBay is always a crap shoot. I’ve done it and sometimes have been pleased with the outcome, sometimes not.

    The last time I bought a used car we used Auto Trader to research available vehicles within 100 miles, and we spent a lot of time pounding the pavement. You can get a good price with conventional dealerships (but not Carmax) if you work at it. I doubt I would go the eBay route again. Transportation costs for vehicles which have to be trucked are getting outrageous, and if the vehicle turns out to not be as represented, you are pretty much SOL.

    • 0 avatar
      yesthatsteve

      “You can get a good price with conventional dealerships (but not Carmax) if you work at it.”

      +1

      The last two used commuter cars I’ve bought have been at new car dealers. They were both excellent deals. I’d have paid 8-10% more than I did for each of them, and still been reasonably satisfied that I hadn’t been screwed. And I didn’t have to spend a full day playing games with either one.

      The keys for me were:

      1. Look for a trade-in that isn’t from one of the dealer’s new-car brands. I got a Prizm at an Infiniti dealer, and a 1st gen Scion xB at a GM dealer. Both were clean enough the dealers didn’t want to send them to auction.

      2. Know what you want. Each time, I started looking at a wide array of models, and eventually narrowed it down to 1-3 cars that fit my needs, biggest wants, and budget.

      3. If at all possible, plan ahead. That way you’re not stuck getting the best deal you can find today, because you need wheels tomorrow. I know it’s not always possible, but it can make a huge difference. Both of my cars had been on the periphery of my radar since they were priced a little high to start with. But, they were both also on the lot for 30+ days, and when I saw the prices drop into a more workable range, I made my move.

      At that point, it becomes a mini-deal for the dealer & sales rep, but that’s OK. They want the car sold, and don’t want to spend hours earning a commission that won’t buy much more than a nice dinner out. I don’t want the hassle of spending the better part of a day to grind out the best price I can. Win-win in my book.

      The process for each car took a few weeks from start to finish. In both cases I got the car I wanted at a price I was more than happy paying.

  • avatar
    Rod Panhard

    Time is money. Convenience has value. If you’re replacing a car that has just croaked and you need something in the next day or two, then that’s not the same.

    On the other hand, if you have several weeks or months to go out and kick tires and search for THE perfect car, then go private.

  • avatar
    radimus

    Carmax and those like it make money because most car buyers haven’t a clue about how to properly evaluate a used car, nor do they want to learn. They want to go somewhere that they can buy the car they like without having to worry too much, and as Carmax’s prices show they are willing to pay for the priveldge.

  • avatar
    Darkhorse

    I’ve bought four cars at Carmax in the last 12 years. Yes, their prices are usually higher than you see on eBay or at your local dealer. So why buy at Carmax? 1 – Their salespeople usually come from another business career or the military and can actually have a rational discussion about a car. 2 – They have a wide variety of cars/trucks to choose from. You don’t have to run around all over the place chasing cars. 3 – The five day return policy saved my bacon when my wife had buyer’s remorse on a car we bought there. These points justify a premium in my opinion.

    • 0 avatar
      geozinger

      There’s not a Carmax near me until you get to the Chicago suburbs (about 1.5 – 2 hrs south west of here), but I did buy a Dakota from one in Atlanta back in the 1990′s. It was a pretty pleasant experience. There were a pretty good number of Dakotas to choose from and I ended up going with Carmax’s financing because the rate was a bit better than my old bank.

      IIRC, the pricing on the truck was about even with what I could find on other dealer lots at the time, I didn’t think it was extraordinarily high. Of course, in the intervening 13 years, eBay Motors and other competitors have done a lot to change the pricing paradigms.

      I still like to look at the Carmax site (the Chicago area ones), but Chicago’s and Grand Rapids’ markets are entirely different. I do miss having that level of selection. It depends on where you are, if you are in a major market, then maybe Carmax doesn’t make sense. If you’re in a smaller market, it could be good for you. Of course, if you’re in too small of a market, you’re screwed.

      You want a minivan? We got 300 of them! If you don’t like the one on our lot, we’ll ship one in for you from another of our lots (sometimes for free if they’re close enough). Try that with your local used car dealer.

  • avatar
    Bisbonian

    I’ve only used CarMax to sell a car. Initially I was disappointed by what I considered a lowball offer but after a month of trying to sell on my own using a variety of methods I had no one offer me anything better.

    I took the car back to CarMax and they offered me the same price as before so I took it. I was a bit upside-down but was out from under the car payment so it ended up cheaper for me in the long run.

    I purchased my last car over the internet, 2000 Honda Insight. Locally these are going for quite a big price but I found one on Ebay with low miles for about $5k less than the going price that I was seeing.

    Of course the issue was that the car was in Chicago and I live in Arizona. I called the dealer the car was sitting at and tried to get the best feel for it that I could and ended up buying the car. The extra fees of course were 2 airplane tickets (wife went with me) and then gas and hotels for 4 days of driving.

    When I arrived I found the car was a little more beat up than I thought it would be but everything worked and I’d just flown 2000 miles so I wasn’t going to turn around. I averaged about 65mpg for the drive home.

    I feel like I still got a good deal on the car and 2 years later I’m averaging in the mid 70′s for mileage. I’ve had to have the IMA battery reconditioned ($800) as the original went out 30 days after the factory warranty expired but that’s okay.

    I’ve since purchased 2 motorcycles online with varying degrees of success.

    In 2009 I purchased a new (leftover) 2008 Moto Guzzi from a dealer in Seattle and had it shipped to my house. I saved roughly $4k over what I would have paid locally for the same bike even after shipping. I’ve never had an easier time purchasing a vehicle and did the whole deal using email except when I sent the check via registered mail.

    This Spring I purchased a used KTM from a private owner just outside of Seattle and flew out to pick it up and ride it home (2200 miles). The bike was a bit rougher than expected but not bad enough for me to change my mind. Once I got it home and was able to give it a good onceover I realized that maybe I should have passed but the issues I uncovered took quite a bit of delving into the bike. I’ve since got it mostly right and am having fun with it, every once in a while I find something that is surprising but have realized that I just need to let it go.

    Would I purchase another vehicle sight unseen over the internet?

    New I’d have no problem but the deal has to be good enough. My local dealer doesn’t want to see me for warranty work on the Guzzi, local being a judgement call since the closest dealer is 100 miles away. Luckily I haven’t had to have anything done but if I had an issue that could create problems for me.

    I’d have to think about it really hard before I purchased another used vehicle off the internet from any sort of distance, once you fly out there’s really no turning back. In my case both of the vehicles I bought are fairly uncommon and my choices were limited. If I could have found something closer I would have been happy to pay a bit more to purchase locally.

    Right now I’m set for the foreseeable future so don’t expect that I’ll have to worry about this again for some time.

  • avatar
    DC Bruce

    I bought one Carmax car years ago (2002). Actually, my wife and daughter bought it (every kid gets one, nice (~$14,000) used car from me). I think they liked the buying/shopping experience, and the warranty. At the time, Carmax was pretty aggressive on pricing; and I remember one dealer complaining about that.

    I don’t think its fair to compare EBay to any dealer, whether its CarMax or anyone else. A sale on EBay is not “in the ordinary course” from a “merchant.” What that means is that there is no express or implied warranty of any kind. The car may or may not be reconditioned . . . and you don’t have the ability to inspect it, much less drive it. In my mind, that equals a BIG discount off of any other price, not just $3,000.

    As for buying a car “covered by the manufacturer’s warranty,” as we all know, that warranty is conditioned on the owner complying with the manufacturer’s maintenance schedule. How do you know that about an E-Bay car? And, more importantly, if you get into a tussle with the manufacturer about a warranty claim, how do you prove it? That’s one of the big attractions of the CPO car: not only do you usually get an extended warranty, but you get assurance that you can make a claim against the original warranty, assuming it’s still in effect.

    In my ranking of preference (apart from where I’m likely to get the lowest price), the first place to shop is a private party; the second place is a CPO car (if you can swing the price); and the third place is a dealer (new or used). I wouldn’t shop EBay or any other auction site at all.

    Apart from price, buying from a private party has a number of big advantages: (1) you can inspect and drive the car, (2) you can size up the owner, (3) you can get the service records and (4) you can take the car to a mechanic that you know and trust for an evaluation. Not to mention, usually a better price. The only downside is that the car will not be reconditioned, so the inevitable dings on the paint of the bumpers will still be there.

    In my used car buying for my daughters, the second daughter got a RAV-4 from a private party. Test drive, service records to back up the factory warranty (still in force) . . . what’s not to like?

    After the first daughter totaled her CarMax Altima, I went shopping for her, too. I found a fairly nice Volvo 850 that was priced well, but I took it to an independent mechanic who serviced my father’s Volvos. Wow! One or two of the brake calipers had seized; the shocks were leaking oil, etc. I took the car back to the seller and gave her a copy of the report . . . and said I really didn’t want to even negotiate the price down to cover these items. Thanks very much.

    I really don’t understand the “value proposition” with CarMax at all. Using a resources like cars.com (which is almost exclusively dealer ads), one can see that, almost always, CarMax is not a good deal. And, there’s always the possibility of negotiating the other dealer’s price down; CarMax is “no haggle.”

    That, I think, would be a more meaningful comparison of CarMax, as opposed to comparing it with EBay prices.

    And, as an aside, it has long been known that the “feedback” scores on E-Bay are easily manipulated and are almost worthless.

  • avatar
    cdfree

    Over the years I have bought three cars from Carmax and traded in four. They have been generally good experiences. I bought an 03 Honda Pilot that I still have, and which has been almost comically problem-free, an 03 Acura CL which was great and a Volvo S80. All were very well-reconditioned cars. I took the Volvo for a post-purchase inspection, and the mechanic found that the rear shocks were leaking along with a couple of other minor things. Carmax fixed it all no questions asked. In my mind the premium was worth it. Plus, each purchase took about as long as buying a washing machine.

  • avatar
    Ken Elias

    The debt at Carmax is related to its finance unit, CAF, and not to the automotive dealership entity. Also, the accounting rules changed last year so that even when CAF sells its loan portfolio to special purpose entities (ABS – Asset Backed Securities), it still shows both the asset and liabilities on its balance sheet.

    Subprime financing at Carmax is done by Banco Santander, not CAF.

  • avatar
    Steven Lang

    A few more answers to the questions and statements above…

    “I’m not afraid of technology, but even if you go with a power seller there’s no real guarantee you won’t get burned.”

    Many of the larger sellers on Ebay do have a warranty along with a buyback guarantee. Texas Direct Auto Inc., the one I featured in this article, offers a 3 month /3,000 mile warranty and a buyback guarantee.

    “I’m not afraid of technology, but even if you go with a power seller there’s no real guarantee you won’t get burned. ”

    Two words for you… Bill Heard.

    Brick and mortar franchise dealers do have certain strong advantages. I’ll be highlighting them in another upcoming article.

    “And, as an aside, it has long been known that the “feedback” scores on E-Bay are easily manipulated and are almost worthless.”

    I have to strongly disagree on that one. Feedback ratings require that the seller not only be fair with folks… but more than fair. To keep that feedback rating above 97% when selling used cars is challenging no matter who you cater to. I can say that as someone who has sold on Ebay for nearly ten years.

    The key to buying anything through an online resource or through a brick and mortar like Carmax is to ALWAYS have the vehicle independently inspected. There is no substitute for due diligence.

  • avatar
    Volt 230

    Carmax is a rip-off the only thing is good for is to make people decide to buy new after all.

  • avatar
    JMII

    What is good about CarMax? No haggle pricing. The price you see is the price you pay. Alot of people are sick of the whole car buying experience. I’ve never bought from CarMax, but I’ve had them appraise two of my used vehicles and eventually buy one of them when a dealer totally low-balled my trade. I’m in the market for a used 350Z and CarMax is about $2K more then most normal dealers and $4K more then private sales. However they do offer free transfers from regional lots and a small fee ($200-400) to transfer a vehicle from another state. If you looking for something particular this alone might make the extra cost worth it.

    Buying from individuals (private party or eBay) in the current credit crunch? Nearly impossible. If you need financing CarMax or a dealership is the only way to go. Buying a car over the internet without a test drive or inspection? Suicide!

  • avatar
    Type57SC

    I’m pretty sure that CarMax has a Toyota and CDJ franchise so might be at their closed auctions.

  • avatar
    cugrad

    I think Carmax has some value for those looking for relatively rare vehicles (rare meaning in their local area). I purchased a used Honda S2000 from Carmax. For me the value of Carmax was selection. I wanted a Rio Yellow one which are few and far between. In my area, S2000′s are not that common. However, Carmax had two that could be shipped for less than $300. If it arrived and wasn’t up to my standards, I didn’t have to pay the shipping. I knew I was paying more than the market price for the car, but the ability to simply find what I wanted was worth it.

  • avatar
    M 1

    Even though I’m cleared to spend as much time as I want at ADESA and Manheim and many of the others, and I even have buyers who attend the far superior auction systems in Japan (editors take note: something I still think would make an incredibly interesting story for TTAC readers), I bought my ’07 Suburban from Carmax.

    Why? Literally nobody could touch their price. This was a manufacturer car with about 2K on the odometer which was worth about a $10K break versus new. No GM dealer could touch it, and I certainly wasn’t going to see this on any lot and probably not at auction either.

    This is not *typical* of Carmax, and although I’m getting out of consumer car/truck sales and focusing more on commercial and equipment, I still take a stroll through their website from time to time, and I do see similar deals.

    As for eBay, I wouldn’t touch that trash-infested cesspool with a ten foot pole. Been there, done that, been burned too many times. If I can’t go see it in person, I’m not sending you more than $500 for whatever you’re selling.


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