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I appreciated CarMax because it was pivotal in my
decision to go with the Accord, but the car that I
bought through Carsala was a higher-end trim level
(Accord EX-L) than the car that I test drove at
Carmax (Accord LX) and cost about $200 less.

- Tamara, a recent car buyer

I had nothing negative to say about CarMax other
than they were expensive.

- Chris, a recent car buyer

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Introduction
CarMax has sold over 2 million cars and is a Fortune 500 company. And yet our study suggests CarMax’s
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no-haggle prices are not particularly good values. This Carsala study examines CarMax’s prices in detail
and compares them to non-CarMax dealers’ prices on similar cars, using Kelley Blue Book as an
equalizer.

1.1 Scope of the Study
The scope of this study includes:

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Comparison of CarMax’s no-haggle prices to their respective Kelley Blue Book Values
 Comparison of non-CarMax dealers’ asking prices on similar cars to their respective Kelley
Blue Book Values
 Evaluation of the effect of negotiating on non-CarMax dealers’ prices relative to their respective
Kelley Blue Book Values
 Control for vehicle quality to better understand differences in value between CarMax and non-
CarMax dealers

1.2 Key Results
In summary, for some of the most popular cars in the U.S. market, this study concluded the following:

 Prices on CarMax cars were right at or very slightly below Kelley Blue Book (.55% ± 1.91% below
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Kelley Blue Book).
 Prices on similar cars (same year, make, model, 250 mile radius) for sale by non-CarMax dealers
were slightly below Kelley Blue Book (1.41% ± 1.43% below Kelley Blue Book).
 Prices on the top 45% of similar cars (same year, make, model, 250 mile radius) for sale by non-
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CarMax dealers were solidly below Kelley Blue Book (9.40% ± 5.92% below Kelley Blue Book).
 Competing against a subset of CarMax cars, which had an average discount from Kelley Blue
Book of -3.74% ± 6.50%, Carsala was able to negotiate prices dramatically below Kelley Blue
Book for similar non-CarMax cars (26.04% ± 5.97% below Kelley Blue Book).
 The average number of previous owners was 1.4 for both CarMax cars and similar cars for sale
by the top 45% of non-CarMax dealers.
 Only 6% of CarMax cars we evaluated had a wreck in the AutoCheck vehicle history report. 12%
of cars for sale by the top 45% of non-CarMax dealers had a wreck in the AutoCheck vehicle
history report. This difference is not likely enough to conclude with confidence that the true
proportion of wrecked cars at CarMax is lower than that of wrecked cars at non-CarMax dealers.

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“Kelley Blue Book” refers to Kelley Blue Book Suggested Retail Price.
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95% confidence, assuming a normal distribution (applies to all confidence intervals).
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Top non-CarMax cars are identified based on the most favorable pricing relative to Kelley Blue Book.

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Our research suggests that paying a no-haggle price at CarMax may translate to paying a price premium,
particularly if the buyer is willing to research, compare, and negotiate with non-CarMax dealers.

Of course, a price premium may be justified. Price is only one consideration, albeit an important one.
Customer experience and service are also critical. These are elements, among others, in which Carsala
believes CarMax excels.

For press inquiries or more information on this study, contact Carsala at press@carsala.com.

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Results
2.1 CarMax’s Prices
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The average discount off Kelley Blue Book for the CarMax cars we considered was .55% ± 1.91%. In
other words, these particular CarMax prices were, on average, very slightly below their respective Kelley
Blue Book values. The spread was substantial, with a standard deviation of close to 10%.

There is evidence to suggest the discount off Kelley Blue Book may increase as the price of the car
increases. The average discount on cars with a price less than $15,000 was -3.32% ± 3.35%. The
average discount on cars with a price between $15,000 and $20,000 was 2.49% ± 2.43%. The average
discount on cars with a price above $20,000 was 6.36% ± 2.32%. The discount increases as the price
increases. However, the overall average discount was minimal because relatively few CarMax cars in the
study were above $20,000 (17%). Note that the sample size of each particular price range was relatively
small and confidence intervals are fairly large as a result.

A subset of the CarMax sample referenced above was used to compare CarMax prices and post-
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negotiation prices on similar cars (same year, make, model, 250 mile radius). The average discount off
Kelley Blue Book for this subset was -3.74% ± 6.50%.

2.2 Non-CarMax Dealers’ Prices
We compared price and Kelley Blue Book values for all the similar cars (same year, make, model, 250
mile radius). This would simulate the outcome of someone who randomly selected a car online, without
any research or comparison at all. The average discount off Kelley Blue Book across our entire search for
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similar cars was 1.41% ± 1.43%. The difference between CarMax prices and those of the non-CarMax
dealers in our sample is not statistically significant. In other words, one cannot reasonably conclude that,
for this population, the true average discount off Kelley Blue Book on CarMax cars is less than on non-
CarMax cars.

2.3 Post- Negotiation Prices
While CarMax offers no-haggle, non-negotiable prices, most cars sold by non-CarMax dealers are sold at
a price lower than asking price. Thus, in order to fully evaluate the price savings or premium a shopper
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pays by going to CarMax, we had to negotiate with non-CarMax dealers to reach post-negotiation prices.

We took a subset of the CarMax cars, which averaged -3.74% ± 6.50% below Kelley Blue Book. We
found similar cars (same year, make, model, 250 mile radius) for sale by non-CarMax dealers, which
averaged 2.68% ± 4.56% below Kelley Blue Book. We isolated the 45% best values among the similar

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The study estimates post-negotiation prices a buyer could achieve via Carsala or extensive personal research and skilled
negotiation.
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Outliers, defined as cars listed >40% above or below Kelley Blue Book, were omitted.
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Carsala is a car buying service that regularly utilizes a network of negotiators around the country to negotiate on behalf of its
customers. Consequently, we were able to follow our existing processes to negotiate as if we had a ready-to-buy customer for each
car.

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cars (same year, make, model, 250 mile radius) offered by non-CarMax dealers, which averaged 9.40% ±
5.92% below Kelley Blue Book. We then negotiated for these non-CarMax “best values.” Post
negotiation prices averaged 26.04% ± 5.97% below Kelley Blue Book.

For example, a 2007 Toyota Corolla was randomly selected from CarMax’s website (-3.74% below Kelley
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Blue Book). We then looked for other 2007 Toyota Corollas in the same 250 mile radius. The average
of all those non-CarMax Corollas was 2.68% below Kelley Blue Book. We then isolated the 45% best
(non-CarMax) values, which averaged 9.40% below Kelley Blue Book. We negotiated with the dealers of
those “best values.” The best deal we negotiated on a similar Corolla (same year, make, model, 250 mile
radius) was 26.04% below Kelley Blue Book.

For these models (representing “popular cars”) in their respective regions, our study concludes:
 Prices on CarMax’s website are very close to Kelley Blue Book (.55% ± 1.91%).
 Prices on similar cars for sale online by non-CarMax dealers are slightly below Kelley Blue Book
(1.41% ± 1.43%).
 Research can isolate the 45% “best deals,” which are solidly below Kelley Blue Book (9.40% ±
5.92%).
 Research and negotiations yield prices substantially below Kelley Blue Book (26.04% ± 5.97%).

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Average discounts are being applied to a single vehicle for illustrative purposes only.

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Quality Control
One obvious question is around quality. Perhaps CarMax’s prices are higher because they have
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systematically higher quality cars. In order to evaluate this, we reviewed AutoCheck reports for all CarMax
cars included in the study and a substantial sample of the top non-CarMax similar cars. Both CarMax cars
and non-CarMax cars averaged 1.4 previous owners. However, while 6% of CarMax cars had been
associated with an accident of some kind, 12% of non-CarMax cars had been associated with an accident
of some kind. Though this suggests one may systematically expect fewer wrecked cars for sale by
CarMax relative to non-CarMax dealers, the difference was not large enough to be statistically significant
or conclude that the true percentages differ from one another.

According to AutoCheck, none of the best deals Carsala negotiated were for cars that were formerly
wrecked.

Unfortunately, AutoCheck
is not a perfect measure of
quality. In the past, Carsala
has found wrecked cars
with clean reports and
odometer rollbacks with clean reports. Alternatively, for some cars that have minor (repaired) issues like a
fender bender, a wreck is noted, often undifferentiated from a major collision. Also, AutoCheck reports do
not measure the degree to which a car for sale has been reconditioned.

Another quality difference between CarMax and non-CarMax dealers is the offering of certified pre-owned
vehicles. Well over 10% of the non-CarMax cars were certified pre-owned. Yet the added value of
certified pre-owned vehicles is not captured by Kelley Blue Book. Thus, the average savings off the real
“value” of the cars offered by non-CarMax dealers is understated. Such understatement is not applicable
to CarMax cars.

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Methodology
4.1 Gathering CarMax Prices
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We began with a list of 20 of the most popular cars in the United States, according to recent sales data.
We then made a randomized list of 94 search queries, comprised of make/model (randomly selected from
the list of the 20 popular cars), zip code (randomly generated from all zip codes in the country), range
(uniformly applied at 250 miles), and year range (uniformly applied at 2005-2008). We executed each of
the 94 search queries at CarMax’s website. We randomly selected one returned vehicle for each of the 94
search queries and recorded the vehicle’s price, attributes (ex: VIN, year, mileage, equipment, etc.), if it
had been wrecked in the past (using AutoCheck report), and number of past owners (using AutoCheck
report). We used the vehicle’s attributes to calculate the Kelley Blue Book using Kelley Blue Book’s
KARPOWER Online.

4.2 Gathering Prices from non-CarMax Dealers
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We used the same randomized list of 94 search queries used on CarMax’s website and executed them
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in Carsala’s proprietary search technology, which searches over 4 million used cars for sale online.
These searches yielded roughly 11,200 results. We compared the prices of those 11,200 cars to their
respective Kelley Blue Book values.

4.3 Gathering Post-Negotiation Prices
In our experience, the difference between CarMax prices and non-CarMax dealers’ prices is that non-
CarMax dealers’ prices are typically negotiable. In order to compare the price a buyer could expect at
CarMax versus another dealer with a similar car, we used Carsala’s professional negotiators. We
selected a subset of 15 CarMax cars, found roughly 1,200 similar cars (same year, make, model, 250
mile radius) at non-CarMax dealers, isolated the roughly 165 best deals among those 1,200, and then
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negotiated for those 165 cars to reach 15 deals to compare to the original subset of 15 CarMax cars.

4.4 Assessing Quality
To compare the quality of the cars sold by CarMax and non-CarMax dealers, we reviewed the AutoCheck
reports on the CarMax cars included in our study, a significant sample of non-CarMax dealers’ similar
cars, and all the “best deals” resulting from our negotiations with non-CarMax dealers for similar cars.

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Statistics provided in this report can be used to come to conclusions about the particular models in their respective regions
included in this study. Conclusions about broader populations (i.e. all CarMax cars or all non-CarMax cars) are only accurate to the
extent that the popular cars included in this study represent that broader population.
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In order to generate an accurate comparison, we used the year of the CarMax car selected for that particular query instead of the
year range.
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Private seller results were removed before analysis.
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The 15 cars were: 2005 Chevy Impala, 2007 Chevy Silverado, 2005 Dodge Ram, 2005 Ford Escape, 2008 Ford Focus, 2006
Ford Fusion, 2007 Nissan Altima, 2005 Honda CR-V, 2005 Nissan Altima, 2006 Pontiac G6, 2007 Pontiac G6, 2005 Toyota Camry,
2007 Toyota Corolla, 2005 Toyota Prius, and 2005 VW Jetta.

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Disclaimer

This pricing study is confidential and proprietary to Carsala, Inc. Carsala, Inc. is not affiliated with or a partner of CarMax Business Services, LLC. The
material, ideas, and concepts contained herein are to be used exclusively to evaluate the capabilities of Carsala, Inc. This study and the information,
concepts and ideas herein may not be used for any purpose other than the evaluation of the capabilities of Carsala, Inc. and may not be reproduced,
distributed, disclosed or communicated to anyone other than the person or entity to which this study was purposefully distributed by Carsala Inc. No
representation or warranty, either express or implied, is provided in relation to the completeness or reliability of this study.

Nothing in this document constitutes an offering of securities or investment advice and any recommendations that may be contained herein have not
been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. This study should not be
regarded by recipients as a substitute for the exercise of their own judgment.

This proposal makes reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of
such trademarks by Carsala, Inc. and is not intended to represent or imply the existence of an association between Carsala, Inc. and the lawful owners
of such trademarks.

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