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Saturday, January 20, 2007

IS A CAR DEALER CRAZY IF HE RECOMMENDS THAT YOU BUY A CAR FROM HIS COMPETITOR?

Well, I guess I’m “nuts” because I am recommending that you consider CarMax the next time you are in the market for a used car. In case you haven’t heard of CarMax, they are the largest seller of used cars in the USA. Unfortunately for readers of the Hometown News, the nearest location is in Boynton Beach, just off I-95, but it might be well worth your drive. CarMax is a publicly owned company that was spun off a few years ago from Circuit City. They are extremely profitable and if you had bought stock in CarMax one year ago, you would have more than doubled your money.

The reason they are so profitable is that they offer the buyer of a used car something that most other used car sellers can’t…a fear-free buying experience. There is only one thing scarier than buying a new car and that is buying a used car. At CarMax you can buy a used car with trust and confidence. For one thing, they offer a 5-day money back guarantee, with the only condition being that you return the car in the same condition it was when you purchased it. The cars that CarMax sells are carefully checked over and thoroughly reconditioned. They wholesale the cars that don’t meet their standards. At CarMax you aren’t dealing with traditional “used car salesmen”. They hire quality individuals from outside the retail car business and train them in the CarMax way of doing business. The price you see on the window and the price you are quoted is “almost” an out-the-door price. Unfortunately, they do add a $149 “dealer fee” which they call a “processing fee”. This is the only thing that CarMax does that I don’t like. However, compared to virtually every other Florida dealer, their “dealer fee is low”.

Another thing they do which I think is really great is buy your old car from you whether you buy a car from them or not. They don’t play games by over-pricing their used cars so that they can pretend to be giving you more for your trade-in then they really are. They do not discount their cars from their posted prices. You can compare their prices with other dealers knowing that the CarMax price you were quoted is their best price (plus $149). My experience with CarMax has been that they pay fair wholesale prices for used cars. My dealership will sometimes sell a non-Toyota trade-in to CarMax because they can appraise it for more money than we can. Sometimes we suggest that our prospective customers drive their trade-in to CarMax and get a price bid, if they feel we cannot offer them a high enough trade-in allowance.

One of the reasons that I know so much about CarMax is that I hired away one of their best managers several months ago. He worked for CarMax in South Florida for 9 years and I was able to persuade him to come to work for my dealership by telling him that we wanted to be as good as CarMax and one day even better. His name is Jeff Dallin and he is now my used Car Manager. We have implemented many of the CarMax ways and even improved on some of them. For example, we over a seven day unconditional money back guarantee on every used car we sell and we do not charge any dealer fee. We also survey all of our used car buyers to measure the level of customer satisfaction for our whole department and each individual salesman. We copied CarMax’s “Above and Beyond” award which is given to employees who do something extra special for a customer.

I’m not ashamed of the fact that I am copying a competitor who has done something better than I can. In fact, this is exactly how Toyota became the best auto manufacturer in the world. Some of you are old enough to remember the first car that Toyota sold in the USA in 1958. It was called the “Toyopet”. I won’t mince words…it was a piece of junk. But Toyota sent engineers to observe the way GM, Ford, and Chrysler manufactured cars, adopted their best practices, and improved on many of them. Today Toyota builds the highest quality cars on the Planet.

2 comments:

  1. It took CAR MAX millions of dollars and endless used car mgrs to get them wise.
    As an independent dealer it was a wise move.

    ReplyDelete
  2. I have worked for Toyota for the last 30 years and in my book they are the best car in the world. I also owna 1958 Toyopet which is all original other than me building a new motor for it . You can see it on my website at Frenchysrides.com. Earl Stewart you have a great dealership. Good luck

    Thanks
    Frenchy Dehoux

    ReplyDelete

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