Carmax Analysis Report 2015

2015 Financial Analysis of Carmax

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State University

July 26, 2015

Carmax is the largest used car retailer in the United States. The majority of consumers purchase used vehicles because the appraisal value decreases immediately when driven off the car lot. Tom Folliard became the CEO as well as the president of Carmax in 2006. Carmax became a unit of Circuit City Stores in 1993, was incorporated in 2006, and employs 22,064 people as of today. It is a franchise and operates 150 used cars stores and 75 markets in the U.S. as of June 19, 2015. Carmax operates weekly or bi-weekly wholesale auctions at 64 of their retail locations. Carmen opened 13 new stores during the fiscal year ended February 28, 2015, and they plan to open between 13 and 16 stores in each of the next three fiscal years. During fiscal year 2016, Carmax plan to open 14 stores and relocate one existing store.

I am analyzing this company bc I have done previous personal research on purchasing a vehicle from a nearby franchise and its attributes are interesting. They provide a variety of complementary products and services, including the Carmax Alto finance operation, the purchase of vehicles from consumers, and vehicle repairs. Carmax is overall a strong company. A key strength is that it has hassle-free buying and selling. There is a minimum 30 day warranty on used cars backed by 5-day refund guarantee. Carmax has excellent advertising and customer satisfaction. It’s location of stores is convenient and they have production and non production stores. Sales and net income have increased over the years. Carmen forecasts a 10% revenue increase annually each year. CarMax sells, finances, and services used and new cars through a chain of about 150 retail stores. It was formed in 1993 as a unit of Circuit City and was spun off into an independent company in late 2002. Used-car sales account for over 80% of revenue, new cars less than 2%, and the remaining portion is composed of...