CarMax: Competing with Carvana | In Practise

CarMax: Competing with Carvana

Former Sales Manager at CarMax

Learning outcomes

  • How CarMax reacted to Carvana entering Raleigh in 2015
  • The offline vs online sales progression
  • Challenges for CarMax selling vehicles online and through the hybrid model
  • How to incentivize sales staff between offline and online sales
  • How CarMax looks at managing both slow and fast moving inventory
  • CarMax in-store reconditioning efficiency
  • Advantages Carvana could have over CarMax

Executive profile

George McGhee

Former Sales Manager at CarMax

George has over 8 years experience working at CarMax as a Senior Sales Manager in one of two Raleigh stores. George’s store sold over 500 units per month and he was responsible for the full sales process and pioneering the transition from physical to online sales. He also oversaw the procurement of inventory and worked closely with the General Manager to manage inventory for the store. Carvana have a vending machine 15 minutes from the Raleigh store so George has first-hand experience competing with the pure-online player. George is now the Managing Director for Vehicle Exchange at WestGate Automotive, an independent auto dealer in Raleigh. Read more

George, can you provide a short introduction to your role and responsibilities at CarMax?

I oversaw the profitability of the store. To make a long story short, I oversaw different processes. I oversaw that the sales process was executed 100% by our sales managers and consultants. I also oversaw procurement of inventory; how we sourced and priced our vehicles, as well as reconditioning them. It would either be from clients who purchased from us or from auctions we attended. There is a massive amount of paperwork involved to ensure all the vehicles on our lot had titles. And there was all the paperwork which clients sign get sent off to financing companies. I oversaw that whole process. It was a very broad spectrum of the inner workings, from the procurement of the vehicles to the sale of the vehicle to the actual paperwork that is needed before and after the vehicle is sold. Sometimes I would handle service department issues when needed.

How many cars did your store sell and where was it located?

The store was in Raleigh, North Carolina, close to Wake Forest. It is the second of two stores in our market and sold on average between 500 and 600 cars per month.

Was that the second store added to the region after the more mature store?

Yes, we were the second store added in 2014. The original Raleigh store was the second store CarMax ever built and was opened in 1994.

How many cars did the more mature store sell a month?

That store sold between 800 and 900 cars per month.

Did you work together much?

Absolutely, since Raleigh was what they call a prime-time market or a market ready to be saturated even more, we had to work together. Many times, our regional vice presidents would come in and ask how our P&L looks and how many vehicles we sell per month, but they would also ask the big question of how many vehicles we sold in the Raleigh market. Our monthly target between the markets was between 1,200 and 1,300 cars. Many of our consultants we opened the store with came from that location.

They transferred over because they were closer to home. There was a lot of communication and working together, especially when we talk about transferring vehicles and handling customer issues.

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CarMax: Competing with Carvana

December 8, 2020

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