One year after it began selling new vehicles, CarMax Auto Superstores Inc. says it will acquire additional Chrysler Corp. franchises in the Atlanta area.
CarMax last week reached a tentative agreement to acquire the Bob Maddox Chrysler-Plymouth-Jeep-Eagle franchises in Forest Park, Ga., just south of Atlanta. CarMax will relocate the franchises to its soon-to-open Southlake CarMax Superstore in nearby Jonesboro, Ga.
CarMax is willing to interview any of the 56 employees at the Bob Maddox dealership who want to work at the new Southlake store. Maddox said CarMax is looking for 175 people to work there.
Maddox, 68, said he will retire after he sheds his franchises. The dealership has been selling between 600 and 700 new cars annually, he said.
Maddox said he expects to close the deal with CarMax on June 16. His son, David Maddox, will operate a used-car store at the Forest Park location, Maddox said.
OPENS IN JUNE
The CarMax Southlake dealership will open in June with a new- and used-car inventory capacity of 750, said Ann Collier, a spokeswoman for Circuit City Stores Inc., the parent company of CarMax.
'We're building this location to better serve the Atlanta area,' Collier said.
The pending deal will be a cash transaction, but CarMax declined to reveal the purchase price. The sale is contingent on approval by Chrysler Corp.
Joe Shady, Chrysler executive director of dealer operations, said he does not anticipate problems in approving the deal.
The Southlake location, at 3100 Mount Zion Parkway, will be the eighth CarMax location and its third in the Atlanta market.
CarMax began selling new vehicles in April 1996 after Chrysler granted Chrysler-Plymouth-Jeep-Eagle franchises to the publicly owned firm at its Norcross, Ga., location, in the northern Atlanta suburbs. CarMax also has a used-car superstore in Kennesaw, Ga., in Atlanta's northwest suburbs. CarMax said it has no plans to add a new-car franchise in Kennesaw.
'CarMax has done a nice job for us and they are progressing nicely in Norcross,' Shady said. 'They are doing very well in sales and are working very hard on service.'
Customer satisfaction scores are better at CarMax's Norcross store than scores at the dealership it is buying, Shady said. Chrysler did not know that CarMax was interested in another Chrysler-Plymouth-Jeep-Eagle dealership in the Atlanta area until a few weeks ago when the used-car superstore chain informed Chrysler of its intent, Shady said.
45 MAJOR MARKETS
The CarMax expansion plan calls for 80 to 90 used-car superstores to open in 45 major markets during the next five years. The company also wants to obtain 25 new-car franchises during the same period. CarMax is focusing on underperforming dealerships in its quest for new-car franchises.
The Bob Maddox dealership fits the type of new-car dealership sought by CarMax, Collier said.
The CarMax strategy is the 'polar opposite' of Republic Industries Inc.'s strategy of using stock to acquire high-performing dealerships, said Ursula Moran, of Sanford, Bernstein & Co., a New York investment banking and research firm.
CarMax wants to be the bargain shopper, Moran said.
Said Austin Ligon, CarMax president: 'We believe that CarMax's customer-friendly sales approach, the additional inventory space and freeway visibility of the Southlake location, and our heavy commitment to advertising will help build market share for Chrysler in the Atlanta area.'
Michael Lowe, a high-volume Chrysler-Plymouth-Dodge-Jeep-Eagle dealer in Jasper, Ga., said he is not overly concerned with the CarMax presence in the Atlanta area.
'All dealers are becoming more competitive now because of CarMax,' Lowe said. 'Why worry about CarMax? They lost $9.3 million (in fiscal 1997).'
Staff Reporter Bradford Wernle contributed to this report.