CarMax, Inc. and its wholly owned subsidiaries (CarMax) provide a broad selection of quality used vehicles and related products and services.
The company is the nation’s largest retailer of used cars, and the company sold 789,050 used vehicles at retail during the fiscal year ended February 28, 2025. The company is also one of the nation’s largest operators of wholesale vehicle auctions, with 544,312 vehicles sold during fiscal 2025, and one of the nation’s largest providers of used vehicle fin...
CarMax, Inc. and its wholly owned subsidiaries (CarMax) provide a broad selection of quality used vehicles and related products and services.
The company is the nation’s largest retailer of used cars, and the company sold 789,050 used vehicles at retail during the fiscal year ended February 28, 2025. The company is also one of the nation’s largest operators of wholesale vehicle auctions, with 544,312 vehicles sold during fiscal 2025, and one of the nation’s largest providers of used vehicle financing, servicing approximately 1.1 million customer accounts as of February 28, 2025. The company’s omni-channel platform empowers its retail customers to buy a car on their terms - online, in-store or a seamless combination of both. The company’s associates, stores, technology and digital capabilities seamlessly tied together enable the company to provide the most customer centric car buying and selling experience.
As of February 28, 2025, the company operated 250 used car stores in 109 U.S. television markets.
On June 1, 2021, the company completed the acquisition of Edmunds Holding Company (‘Edmunds’), one of the most well-established and trusted online guides for automotive information and a recognized leader in digital car shopping innovations. With this acquisition, CarMax enhanced its digital capabilities and further strengthened its role and reach across the used auto ecosystem while adding exceptional technology and creative talent.
CarMax Business
The company operates in two reportable segments: CarMax Sales Operations and CarMax Auto Finance (‘CAF’).
The company’s CarMax Sales Operations segment consists of all aspects of the company’s auto merchandising and service operations, excluding financing provided by CAF. The company’s CAF segment solely consists of the company’s own finance operation that provides financing to customers buying retail vehicles from CarMax.
CarMax Sales Operations. The company’s CarMax Sales Operations segment sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers, all for competitive, no-haggle prices. The company enables its customers to separately evaluate each component of the sales process based on comprehensive information about the terms and associated prices of each component. Customers can accept or decline any individual element of the offer without affecting the price or terms of any other component of the offer.
Purchasing a Vehicle:
The vehicle purchase process at CarMax differs fundamentally from the traditional auto retail experience. The company’s no-haggle pricing removes a frequent customer frustration with the purchase process and allows customers to shop for vehicles the same way they shop for other consumer products. The company’s omni-channel platform further empowers the company’s customers to buy a car on their own terms – online, in-store or a seamless combination of both.
The company’s omni-channel platform provides multiple ways for its customers to interact with the company, including completely online. A customer may interact online with Skye (the company’s AI-powered virtual assistant) or with the company’s customer experience consultants via phone, text messages or chat. These employees are paid a fixed hourly rate and receive incentive bonuses based on their ability to effectively progress the customer through their car-buying journey. Customers may also interact in-person with the company’s sales consultants who are generally paid commissions on a fixed dollars-per-unit standard, thereby earning the same commission regardless of the vehicle being sold, the amount a customer finances or the related interest rate. These pay structures align the company’s associates’ interests with those of the company’s customers, in contrast to other dealerships where sales and finance personnel may receive higher commissions for negotiating higher prices and interest rates, or steering customers to vehicles with higher gross profits.
The company reconditions every used vehicle the company retails to meet its CarMax Quality Certified standards, and each vehicle must pass an inspection before being offered for sale. The company stands behind every retail used vehicle the company sells with its Love Your Car Guarantee. This guarantee gives customers the ability to take 24-hour test drives before committing to purchase, as well as provides a 10-day money-back guarantee and a 90-day/4,000-mile limited warranty. The company’s CarMax Quality Certified standards were developed internally by CarMax and are not affiliated with any third party or original equipment manufacturer program.
The company maximizes customer choice by offering a large selection of inventory on the company’s lots and by making its nationwide inventory available for viewing on the company’s online platforms and mobile app. As of February 28, 2025, the company had approximately 73,000 saleable retail vehicles in the company’s inventory. Vehicles in-transit or on customer hold are not reservable by other customers on the company’s website. Upon request by a customer, the company will transfer virtually any used vehicle in the company’s inventory. This gives CarMax customers access to a much larger selection of vehicles than any traditional auto retailer. In fiscal 2025, approximately 38% of the company’s vehicles sold were transferred at customer request.
Selling the company a Vehicle:
The company has separated the practice of trading in a used vehicle in conjunction with the purchase of another vehicle into two distinct and independent transactions. The company will appraise a customer’s vehicle in-person free of charge and make a written, guaranteed offer to buy that vehicle regardless of whether the owner is purchasing a vehicle from the company. The company also provides online instant appraisal offers, which quickly give customers an offer on their vehicle. The company’s no-haggle offer is good for seven days. The success of these offerings strengthens the company’s leadership position as the largest used vehicle buyer from consumers in the U.S.
Vehicle purchases are also made through MaxOffer, the company’s digital appraisal product for dealers that gives licensed dealers an instant offer good for seven days. The company leverages the Edmunds sales team to open new markets and sign-up new dealers for MaxOffer.
In fiscal 2025, the company purchased approximately 1.2 million vehicles from consumers and dealers.
Based on age, mileage or condition, approximately half of the vehicles acquired through the company’s appraisal processes meet the company’s retail standards. Those vehicles that do not meet the company’s retail standards are sold to licensed dealers through the company’s wholesale auctions. Unlike many other auto auctions, the company owns all the vehicles that the company sells in its auctions, which allows the company to maintain a high auction sales rate. This high sales rate, combined with dealer-friendly practices, makes the company’s auctions an attractive source of vehicles for licensed dealers. The company continues to further enhance its auction products to improve dealer experiences. For fiscal 2025, the company’s average auction sales rate was approximately 98%.
Financing a Vehicle:
The availability of financing is a critical component of the vehicle purchase process, and having an array of finance sources increases approvals, expands access to financing for the company’s customers and mitigates risk to CarMax. The company’s finance program accommodates customers across a wide range of the credit spectrum through both CAF and third-party providers. The company’s processes and systems, transparency of pricing, and vehicle quality, as well as the integrity of the information collected at the time the customer applies for credit, enable CAF and the company’s third-party providers to make underwriting decisions in a unique and advantageous environment distinct from the traditional auto retail environment. All finance offers, whether from CAF or the company’s third-party providers, are backed by a 3-day payoff option, which allows customers to refinance their loan with another finance provider within three business days at no charge.
The company offers pre-qualification and finance-based shopping products nationwide, which are supported by CAF and multiple third-party providers. These products enable customers to request pre-qualification online with no impact to credit scores and receive their decisions and terms within minutes, empowering them to conveniently shop with their personalized, pre-qualification terms across the company’s nationwide inventory. These products seamlessly provide consumers with the information and capabilities they need to shop for financing that best meets their budget and needs, further differentiating CarMax’s customer-centric financing experience. Approximately 80% of the company’s customers use the company’s online finance-based shopping tool as they begin the credit process. The company has also established an online checkout and purchasing experience, which integrates the company’s financing process, allowing eligible customers to apply and accept finance offers online without the assistance of an associate. The company continues to enhance and further expand these products and experiences.
Related Products and Services:
The company provides customers with a range of other related products and services, including extended protection plan (‘EPP’) products and vehicle repair service. EPP products include extended service plans (‘ESPs’) and guaranteed asset protection (‘GAP’), which is designed to cover the unpaid balance on an auto loan in the event of a total loss of the vehicle or unrecovered theft. The company’s ESP customers have access to vehicle repair service at each CarMax store and at thousands of independent and franchised service providers. The broad scope of the company’s ESPs helps promote customer satisfaction and loyalty, and thus increases the likelihood of repeat and referral business. In fiscal 2025, approximately 54% of the customers who purchased a retail used vehicle also purchased an ESP and approximately 18% purchased GAP.
CarMax Auto Finance. CAF provides financing solely to customers buying retail vehicles from CarMax. CAF allows the company to manage its reliance on third-party finance providers and to leverage knowledge of the company’s business to provide qualifying customers a competitive financing option. CAF utilizes proprietary scoring models based upon the credit history and other credit data of the customer along with CAF’s historical experience to predict the likelihood of customer repayment. Because CAF offers financing solely to CarMax customers, the company’s scoring models are optimized for the CarMax channel. CAF enables the company to capture additional profits, cash flows and sales. After the effect of 3-day payoffs and vehicle returns, CAF financed 42.7% of the company’s retail used vehicle unit sales in fiscal 2025.
CAF also services all auto loans it originates and is responsible for providing billing statements, collecting payments, maintaining contact with delinquent customers, and arranging for the repossession of vehicles securing defaulted loans.
Products and Services
Retail Merchandising. The company offers customers a broad selection of makes and models of used vehicles, including domestic, imported and luxury vehicles, as well as hybrid and electric vehicles (‘EV’), at competitive prices. The company’s focus is vehicles that are 0 to 10 years old, with vehicles that are 0 to 6 years old representing approximately 75% of used vehicle sales in fiscal 2025.
Wholesale Auctions. The typical vehicle sold at the company’s wholesale auctions is more than 10 years old and has more than 100,000 miles. The company provides condition disclosures on each vehicle, including those for vehicles with major mechanical issues, possible frame or flood damage, branded titles, salvage history and unknown true mileage. Professional, licensed auctioneers conduct the company’s auctions. Dealers pay a fee to the company based on the sales price of the vehicles they purchase. The company’s auctions are generally held on a weekly or bi-weekly basis.
Extended Protection Plans. In conjunction with the sale of a vehicle, the company offers customers EPP products. The company receives revenue for selling these plans on behalf of unrelated third parties, who are the primary obligors. The company has no contractual liability to customers for claims under these agreements. The ESPs the company offers on all used retail vehicles provide coverage up to 60 months (subject to mileage limitations). GAP covers the customer for the term of their finance contract. The EPPs that the company sells have been designed to the company’s specifications and are administered by the third parties through private-label arrangements. Periodically, the company may receive profit-sharing revenues based upon the performance of the ESP policies administered by third parties. As of February 28, 2025, the company’s third-party ESP providers included Assurant, Inc., CNA National Warranty Corporation and Fidelity Warranty Services, Inc. The company’s third-party GAP provider as of February 28, 2025 was Safe-Guard Products International LLC.
Reconditioning and Service. An integral part of the company’s used car consumer offer is the reconditioning process, designed to make sure every car meets the company’s internal standards before it can become a CarMax Quality Certified vehicle. This process includes an inspection of the engine and all major systems. Based on this inspection, the company determines the reconditioning necessary to bring the vehicle up to the company’s internal quality standards. Many of the company’s stores depend upon nearby, typically larger, CarMax stores for reconditioning, which increases efficiency and reduces overhead. The company utilizes stand-alone reconditioning centers to balance production capacity across the company’s stores and drive efficiency across the company’s network. The company performs most routine mechanical and minor body repairs in-house; however, for some reconditioning services, including but not limited to, services related to manufacturer’s warranties, the company engages third parties specializing in those services. CarMax does not have manufacturer authorization to complete recall-related repairs, and some vehicles CarMax sells may have unrepaired safety recalls. However, safety recall information, as reported by the National Highway Traffic Safety Administration, is available on the company’s website, and the company reviews any unrepaired safety recall information with its used vehicle customers before purchase.
All CarMax used car stores provide vehicle repair service, including repairs of vehicles covered by the ESPs the company sells. Additionally, the company has partnered with third-party auto service and repair providers. Through these partnerships, the company’s customers have access to a nationwide network of trusted, quality and fair-priced service and repair locations.
Customer Credit. The company offers financing alternatives for retail customers across a wide range of the credit spectrum through CAF and arrangements with several financial institutions. Vehicles are financed using retail installment contracts secured by the vehicle. As of February 28, 2025, the company’s network of third-party finance providers included Ally Financial, American Credit Acceptance, Capital One Auto Finance, Exeter Finance Corp., Santander Consumer USA and Westlake Financial Services. The company has no recourse liability for credit losses on retail installment contracts arranged and held by third-party providers, and the company periodically tests additional third-party providers.
Generally, credit applications submitted by customers to CarMax are initially reviewed by CAF using the company’s proprietary underwriting standards. Based on that review, CAF makes financing offers designed to create a loan portfolio that meets the company’s targeted risk profile in the aggregate. Applications that CAF declines or approves with conditions are generally evaluated by other third-party finance providers. Third-party providers generally either pay the company or are paid a fixed, pre-negotiated fee per contract. The company refers to the providers who generally pay the company a fee or to whom no fee is paid as Tier 2 providers, and the company refers to providers to whom the company pay a fee as Tier 3 providers. The company is willing to pay a fee to Tier 3 providers because their participation provides the company with incremental sales by enabling customers to secure financing that they may not otherwise be able to obtain. All fees either received or paid are pre-negotiated at a fixed amount and do not vary based on the amount financed, the interest rate, the term of the loan or the loan-to-value ratio. CAF also provides financing for a small percentage of customers who would typically be financed by a Tier 2 or Tier 3 provider. CAF is building the capability to scale its participation across all credit tiers, which will help to capture finance economics, drive sales, and complement the company’s valued lending partnerships that are a key foundation of CarMax’s best-in-class credit platform.
Seasonality
Historically, the company’s business has been seasonal. The company’s stores typically experience their strongest traffic and sales in the spring and summer, with an increase in traffic and sales in February and March, coinciding with federal income tax refunds.
Marketing and Advertising
The company’s marketing strategies are focused on driving customer growth through building awareness and affinity for the brand and acquiring in-market shoppers and sellers. These strategies are implemented through a broad range of media, including but not limited to, traditional broadcast, digital, search, social, out-of-home, sports sponsorships and influencer and activation programs. The company’s website and related mobile app received an average of 35 million monthly visits during fiscal 2025 and are a critical part of the customer’s journey, allowing them to learn about CarMax, explore the company’s full inventory in real time, initiate vehicle transfers, apply for financing pre-qualification, receive an appraisal offer and even buy a car fully online. The company’s survey data indicates that during fiscal 2025, approximately 95% of customers who purchased a vehicle from the company had first visited the company online. In addition, approximately 80% of the company’s customers leveraged some or all of the company’s digital capabilities to complete their transactions in fiscal 2025.
In fiscal 2025, the company continued building the CarMax brand through new creative campaigns promoting the company’s omni-channel platform as well as brand reassurance messaging, highlighting the company’s money back guarantee and up-front pricing. The company extended its Never Settle campaign, encouraging customers to never settle for less than the CarMax experience when buying or selling a car. The company has expanded its partnerships with the WNBA and the NWSL, including the company’s front-of-kit sponsorship of the NWSL’s Gotham FC and the company’s founding partnership of the WNBA’s new Golden State Valkyries. Additionally, in the company’s hometown of Richmond, Virginia, the company announced a naming rights agreement for the new ballpark and home of the Richmond Flying Squirrels, an AA minor league baseball team, set to open in the 2026 season.
Intellectual Property
The company’s brand image is a critical element of its business strategy.
Laws and Regulations
The company’s activities are subject to oversight by the Federal Trade Commission and other federal and state regulators, and the company’s financing activities are also subject to the supervisory authority of the Consumer Financial Protection Bureau.
History
CarMax, Inc. was founded in 1993. The company was incorporated under the laws of the Commonwealth of Virginia in 1996.
