While CarMax reported solid third-quarter results Thursday (Dec. 19), including a 5.4% increase in retail used unit sales and a 6.3% rise in wholesale unit sales, company officials attributed this growth to strong execution across its business model, led by its omnichannel strategy.
This strategy has become a key differentiator, according to CEO Bill Nash. CarMax uses advanced technology to improve car images, reviews and details, providing targeted content based on individual customer preferences. It also aggregates information into easily digestible summaries, making the car-buying process more efficient for customers.
“Omnichannel capabilities have strengthened our business model,” Nash shared with analysts during the earnings call. “We’re focused on refining the experience for associates and customers. We want to make the experience better with less friction and more conversion. I’m not sure the consumer’s mindset has changed. It’s more driven by things we’re doing. We’re focused on removing that friction. Consumers are going to want this type of experience and the more you can have it seamless and frictionless, that’s who’s going to win.”
CarMax’s recent initiatives are focused on creating a more seamless car-buying experience, catering to the growing preference among consumers to blend online and in-store shopping, Nash noted, including the introduction of digital tools that allow customers to begin their journey online and smoothly transition to physical locations as needed. CarMax officials want to make sure customers receive consistent and efficient service, regardless of whether they start their purchase online or in-store.
One of the key elements of CarMax’s strategy is how it has reduced friction for both customers and employees, Nash said. Automated assistants help customers complete digital steps in the car-buying process, a trend that has significantly improved conversion rates across its channels. While web traffic has remained largely stable, CarMax has seen positive momentum driven by higher levels of customer engagement, both online and in-store.
“Our remote customers are more engaged, and we have more engaged customers in the store,” Nash said. “As prices have come down, that’s a tailwind for us. But equally important is the focus internally on execution of experiences and efficiencies. It’s because we’ve improved the experience.”
Chief Financial Officer Enrique Mayor-Mora noted that web chats increased 10% during the quarter.
“Consumers are doing more activities on their own,” Mayor-Mora said. “We’re fine-tuning that model. What that means is less labor but more effective labor. We’re really excited about that.”
CarMax’s omnichannel experience push is reflected in the company’s third-quarter results.
Online retail sales accounted for 15% of retail unit sales, a slight but notable increase from last year, and revenue from online transactions reached $2 billion, representing approximately 32% of net revenue.
CarMax’s Auto Finance division also showed a strong performance, with a 7.6% increase in income, driven by higher net interest margins and managed receivables.
“I am pleased with the positive momentum that we are driving across our diversified business model,” Nash said. “Our solid execution and a more stable environment for vehicle valuations enabled us to deliver robust EPS growth driven by increases in unit sales and buys, solid margins, growth in CAF income and ongoing management of SG&A. Our associates and our best-in-class omnichannel experiences are key differentiators that enable our success. We are excited to leverage the capabilities we have built to drive growth as we access the largest total addressable market within our industry.”
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