CarMax On Used-Car Buying Spree As Market Madness Continues

Tim Healey
by Tim Healey

With used-car prices soaring, retailer CarMax has been busy swooping up used vehicles to flip for sale.

That could be a solid strategy since the chip shortage has left new-car dealers bereft of vehicles on the lot.

CarMax said it has bought 236 percent more cars this year than last, leaving it with 40,000 vehicles in inventory — and that’s still 10,000 down from last year, according to Bloomberg.

“They are often pleasantly surprised with a higher offer than they anticipated,” Jim Lyski, executive vice president of corporate strategy, marketing and product for CarMax, said to Bloomberg about the company’s customers. “We would expect pricing to stay elevated in the near term.”

Dealers are desperate for product — new or used — to sell. So desperate, according to Bloomberg, that even so-called “clunkers” are fetching more money. Bloomberg cites Edmunds in reporting that cars with between 100,000 and 109,999 miles are going for an average of $16,489, up 31 percent from last year. Pickup trucks with high odometer readings are more valuable than other high-mileage cars, with Silverados and F-150s selling for over 40 percent more than last year.

As you might know, dealers use auctions to source used cars, in addition to taking vehicles in on trade. But even the auctions aren’t providing sanctuary, as their inventory is about one-third what it was two years ago.

For CarMax, the strategy of buying up used cars makes obvious sense — while the competition has barren lots, the retailer will be able to entice consumers to its showrooms, thanks to inventory, and still charge a premium since supply is tight.

When the market madness stops, no one knows. One economist quoted by Bloomberg said the spring’s stimulus checks, combined with tax-refund season, drove demand, and that demand might cool off. On the other hand, the chip shortage continues unabated.

That, plus cheap financing and the ability to get good money for trade-ins, both of which allow consumers to pay the high prices being asked, means that the sky-high pricing for cars, new and used, could be with us for a while. One forecaster suggests the high prices will remain for the rest of the year.

Forecasts are just that — and they can turn out wrong. That said, while the future is uncertain, in the present, you might still be considered insane if you want to buy a used car.

[Image: Gunter Nezhoda/Shutterstock.com]

Tim Healey
Tim Healey

Tim Healey grew up around the auto-parts business and has always had a love for cars — his parents joke his first word was “‘Vette”. Despite this, he wanted to pursue a career in sports writing but he ended up falling semi-accidentally into the automotive-journalism industry, first at Consumer Guide Automotive and later at Web2Carz.com. He also worked as an industry analyst at Mintel Group and freelanced for About.com, CarFax, Vehix.com, High Gear Media, Torque News, FutureCar.com, Cars.com, among others, and of course Vertical Scope sites such as AutoGuide.com, Off-Road.com, and HybridCars.com. He’s an urbanite and as such, doesn’t need a daily driver, but if he had one, it would be compact, sporty, and have a manual transmission.

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  • Dmulyadi Dmulyadi on Jul 24, 2021

    Guess time to sell my extra cars. Anyone interested in Suzuki SX4 crossover hatcback AWD? It's Automatic. Or first gen RAV4 2 doors with turbo engine from Celiac GT4? Yes it's manual and AWD too. I'll keep the other two cars just in case.

  • 3SpeedAutomatic 3SpeedAutomatic on Jul 25, 2021

    A story on YouTube via the WSJ states the rental car agencies were so desperate for inventory, they were turning to car auctions for fleet additions. Another contributing factor to the sky high prices for used cars. https://www.youtube.com/watch?v=KAU3oV6Zhys

  • Dr Mindbender I like the look of the new little hot hatch GV they showed in Orange...it will be interesting to see if they start making larger hybrid drivetrains on their own or find a partner. I looked at Teslas in 2018...EVs don't meet my needs until solid state and prolific recharge in the open desert of SW USA is a reality. Even Porsche expanded their hybrid tech to the flagship, and Kia is all about aping Porsche, perhaps we'll see a T-hybrid in the Genesis lineup???? I always wondered when using a battery to pre-spin a turbocharger would actually work. In general tho, I find the Genesis design language to be quite awful, but I also think the Cayenne is a thing of magnificent beauty...so that balances out I guess. The focus on luxury over performance is where I think they go wrong...but again, Porsche...so I guess my lenses are quite tinted.
  • Slavuta So, Trump was hyperbolic... big deal.
  • Slavuta The question was, "does it make sense for Elon...?" I don't know why people jumped into conclusions in this comment section. My answer is this - if he does it, it makes sense to him. He knows better than any of us here. May be with his donations he can become an ambassador to an important state or secretary of energy, or chief of NASA. This is how America works. Donate $1m - ambassador to Poland, $3m - japan, $5M - Germany, etc. $20,000 could buy you Kenya or something
  • CanadaCraig We should be able to give comments a 'dislike' or 'thumbs down'. We're not 6 years old. I'm sure we cope if someone doesn't 'like' our comment.
  • Dartdude He knows that a Trump economy is a great opportunity to sell more cars (EV,ICE). Compare both terms and Trumps is the winner by a long shot.
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