Ask a big dealer group where its people go to learn how shoppers expect to buy a used car, and the answer may be the nearest CarMax. One 40-store group we know regularly sends team members there to mystery shop. For better or worse, CarMax has become the reference point most customers carry into every other used-car lot.
When the market's benchmark gets better, everyone else's customers notice.
CarMax Q2 Earnings: Inside the "Shift Into Gear" Restructuring
CEO Keith Barr, a former hotel industry executive, took over in March after the board fired longtime CEO Bill Nash. His four-part plan has been in place since June:
Pillar | What CarMax has done |
|---|---|
Connect digital and in-store | Redesigned vehicle detail pages, scaled AI voice for inbound calls, created a chief digital and customer officer role |
Grow finance and protection profit | CarMax Auto Finance income rose 32% in Q2 |
Get leaner | Cut 725 jobs in three rounds this year, including 145 in September |
Tighten logistics | Reduced reconditioning and operating costs |
The fiscal second quarter, which ended Aug. 31, delivered the early scoreboard: net earnings rose 73% to $165.3 million, and revenue climbed 20% to $7.9 billion, with double-digit gains in both retail and wholesale sales. A year earlier, all of those numbers were falling.
Barr also credited the FTC's March warning to 97 dealer groups on advertising transparency. As competitors adjusted their disclosures, their advertised prices effectively rose.
"We were already one of the most transparent, if not the most transparent, in the industry. It just strengthened the CarMax value proposition." Keith Barr, CarMax CEO
CarMax will share more details at a Nov. 3 strategic update.
Lessons for Franchise Dealers From CarMax's Digital-to-Store Strategy
CarMax and Carvana have a structural advantage most franchise dealers don't: one brand, one path, and no OEM to negotiate with. That freedom lets them redesign the buying experience faster, which is exactly why they've set the trends for the past 15 to 20 years.
So start with the simplest test. Pull up a vehicle listing card on CarMax or Carvana, then pull up one of yours. Theirs tend to be clean, with very few buttons. Many dealer cards are stacked with calls to action competing for attention.
The easiest way to compete with CarMax is to make your shopping experience just as easy to understand.
Transparent pricing is also turning into an advantage regulators are reinforcing. The stores that already lead with an honest number have the least to change.
We break it all down on today's episode of the Automotive State of the Union.
