Caveat Emptor, Sure, ...

Monday, June 04, 2018

But CarMax Amazes

Q What can I do to get you into a car today? A Offer me a straightforward deal for something I actually want. (Image via Pexels.)
There's an article at Jalopnik ostensibly about how used car chain CarMax makes more money than its competitors, but whose myopic, dollars-only focus might cause readers to miss the real story -- and lazy ones to find more cherry-picked "evidence" that capitalism is exploitative.

Author Tom McParland claims, "The primary reason for this is simple -- most people are overpaying."

This reminds me of something my father would say after hearing some crank complain about his house not fetching the price he was hoping for: "A house is only worth what someone is willing to pay for it." All MacParland's article really does is show that this works in both price directions -- and that the adage, "Let the buyer beware," remains fully in force, even in this day of free-flowing information and innovation in the used car market.

And that's a shame, because while MacParland adroitly uses the Internet to cherry pick examples of CarMax charging more than competitors for comparable vehicles -- as if an astute car buyer wouldn't think to do that -- he gives short shrift to the strong points of CarMax. He does mention them in passing, though:
[W]hat makes CarMax such a draw for used car buyers is excellent marketing that espouses a low-stress, hassle-free car buying experience. It also helps that it has tons of locations in major metro areas and customers have the ability to transfer most vehicles from one location to the next for a fee. This gives buyers access to a nationwide network of inventory. Of course, the crux of the CarMax strategy is the "no-haggle" pricing. The price you see is what you pay. [bold added]
I recently had to buy a replacement for the family car after getting rear-ended and chose to buy certified pre-owned in part because we will soon need to replace our other car. So we looked for cars via CarFax and visited a couple of lots. I didn't ultimately use CarMax, but even so, I'm sure someone more knowledgeable about cars and more comfortable haggling would look at my purchase and think I was had.


Perhaps -- if I wasted a week driving around the countryside -- I could have found the same thing for a thousand bucks or so less. But I was able to locate, test-drive, and buy a fine automobile in less than a day. And it's under a warranty. The dealer I used deserves a profit, and I don't regret a dime I spent.

I remember what a pain buying used cars once was: CarMax and other companies have taken much of that pain -- and the guesswork (or extra time and expense) -- out of finding, evaluating, and purchasing used cars. This is an amazing achievement, but MacParland is unimpressed simply  because there are cheaper options in the marketplace. The real story is how they fixed this process, rather than what amounts to "look for bargains." Even if CarMax sold every car at a premium over the competition, that might reflect the added expense associated with making the purchase easy and convenient. But even if it didn't, the company can't make anyone buy from them. So, no, they aren't "overpaying," and I'd bet that many, if not most, of them are very happy with the reduced amounts of time and stress and greater assurance of quality they got for the price.

-- CAV

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