CarMax: Putting the Fun Back Into the Car-Buying Experience

by Tom Hinton

On New Year’s Eve morning, I found myself at CarMax in San Diego with my 21-year old daughter, Megan. We were shopping for a car that I had promised her a car as a college graduation gift and she was ready to cash-in her chit. After visiting the annual auto show, she had narrowed her choices to either a new Honda CRV or a pre-owned Lexus RX 330 just like one of her college roommates owned. “Her dad must be a wealthy tycoon,” I told Megan when I learned about her roommate’s choice of transportation. “Well,” my daughter replied coolly, “they do live in Rancho Santa Fe.” I quickly got the feeling I was being taken for a ride by my eldest daughter. You see, Rancho Santa Fe is the zip code of Zillionaires! But, then I took three deep breathes and decided there was no harm in looking. So, off we went to CarMax.

Now, I should probably confess something here-and-now about me and cars. I like cars, but I do not like the car-buying experience at auto dealerships. In fact, I abhor it! In thirty years of buying cars, I have never had a positive buying experience at an auto dealership. For me, it is a demeaning and manipulative experience in which you are pushed, pressed, cajoled, and subjected to every under-handed sales tactic known to mankind by unscrupulous men in sunglasses with greasy hair and unkempt moustaches, who wear plaid sports jackets with clip-on ties and white socks. I would rank my car buying experiences just below falling off a cruise ship in the middle of the Pacific Ocean; or, accidentally locking myself out of my hotel room at midnight without any clothes on. It’s that bad!

Now that I’ve got that off my chest, let me share my experience at CarMax. A good friend of mine, who is always on the lookout for interesting topics and articles that I can write about, told me about CarMax and suggested I visit their San Diego operation and write a story on their superior customer service and sales experience. My friend had a very positive experience there and he thought it merited my consideration. He gave me the name of the store manager and encouraged me to drop-in and talk with him. I filed it away as a possible idea but never acted on it.

Scroll forward eight weeks when my daughter asked me to accompany her to CarMax so she could look at a few cars she had identified on their website. Megan had done her research on the CarMax website and found five vehicles she liked.

We arrived at CarMax about 9:00 am and were promptly greeted by a friendly, professionally-dressed young man who paged the store manager at my request. Todd Blackwell, the Location General Manager, quickly appeared, and greeted us warmly. I explained the reason for our visit and Todd suggested that Megan spend some time with Elena, another pleasant CarMax salesperson, who could show Megan the vehicles she had identified in her web search. Elena had joined CarMax just six weeks earlier and referred to herself as a “refugee of the depressed California home mortgage business.” It was obvious she was enjoying her new career with CarMax and she developed a positive rapport with my daughter. I took the opportunity to ask Todd about the company and how business was going at his new location.

The CarMax lot in San Diego was expansive with hundreds of pre-owned cars. I was impressed by the fact that CarMax had transferred one vehicle from their Orange County location to San Diego so that Megan could test drive it. I was already impressed with their pro-active customer service and sales management process. It was unlike my previous car buying trips, and that was a good sign!

Todd explained that CarMax was in business to sell cars, not to haggle over price. So, there was no negotiating or sales pressure. The sticker price on the side of each vehicle was CarMax’s sales price. Take it or leave it. Todd also explained to us that his sales managers made the same commission on a Lexus that they would make on a Mustang or Honda Accord. His point was that CarMax’s commission structure allowed their salespersons to sell me the car I wanted to buy instead of pressuring me into a vehicle I couldn’t afford or didn’t really want. There was really no incentive for a CarMax salesperson to up sell me. I liked the concept. I was pleasantly surprised because the process unfolded just as Todd had told me it would. I began to relax and let my guard down.

In my research, I learned that CarMax was a Fortune 500 company and one of the Fortune 2007 "100 Best Companies to Work For.” That explained the well-groomed, articulate, and friendly employees I encountered. Todd told me CarMax was the nation's largest retailer of used cars. With headquarters in Richmond, Va., CarMax has 88 used car superstores in 41 markets. CarMax also operates six new car franchises, all of which are integrated or co-located with their used car superstores. Management must be doing something right because during the twelve month period that ended August 31, 2007, CarMax retailed 358,777 used vehicles and sold 220,715 wholesale vehicles at their in-store auctions.

While Todd and I chatted amid rows of pre-owned cars, Megan was busy inspecting several Lexus Rx vehicles with Elena. I learned something interesting that morning about how a 21 year-old women goes about evaluating the car she wants to buy. First, the exterior color has to be just right. Then, the interior color must be a good match. Finally, when she opens the car door and sits in the driver’s seat, her focus goes immediately to the radio, CD player, navigational system, and all the other bells and whistles she can find. The more technology, the more impressed she is with the vehicle.

As I watched this fascinating process unfold, I realized how much things had changed in seven short years when I last bought a car. I was both humored and horrified as Megan exclaimed to Elena that she “loved the car!” Trapped in the old school philosophy of car-buying tactics, I remained quiet and didn’t show any emotion because I didn’t want Elena to reel me in, hook-line-and sinker! Secretly, I found the Lexus Rx 330 to be a solid car with nice design lines and an outstanding crash rating. These are the kinds of things a father considers. The Lexus Rx 330 drove smoothly and handled the road exceptionally well. In reviewing the maintenance report with Todd, we learned the car’s brief history and discovered it had been well-maintained by its previous owner. With 36,000 miles on the odometer, it was hardly used and it sparkled like a new car. Megan wanted to buy it!

At this stage, I was relegated to the role of a bagman. Elena was dealing with the future owner and, respectfully, she knew I was simply along for the ride -- and to write the check. That’s what dads are for, right? So, I let Megan go through the purchasing process including the part where she got to complete the financial forms, credit application, and the DMV paperwork. I wanted her to know how painful it was to buy a car. But, fortunately, thanks to the CarMax team, it was actually a pleasant experience. In fact, I was surprised that CarMax had taken a traditionally adversarial experience and turned it into a pleasurable one.

Megan was all smiles and dutifully completed the few forms and paperwork as she and Elena chatted about school, careers, hair styles, and everything else women like to discuss.

Two hours later, Elena and Megan hugged each other good-bye as she handed Megan the keys to her new (pre-owned) Lexus Rx 330 and reviewed with her certain features of the car. Then, she hugged me, thanked me for being a great dad, and wished us a safe and happy new year as we drove off into 2008! I’m still recovery from the shock of experiencing my first positive car-buying experience thanks to CarMax. The car payment shock will follow in a month!

About the Author: Tom Hinton is America’s Expert on Business Excellence. As a business author and consultant, Tom helps his clients create a culture of excellence in the workplace. He is a popular speaker at conferences and corporate events. He can be reached at tom@tomhinton.com