CarMax Inc., which specializes in used vehicles, is realigning its new-car franchise holdings.
CarMax President Austin Ligon says the Glen Allen, Va., company's only Ford Motor Co. store, in Kenosha, Wis., is for sale.
In March, the company announced that it was selling its five Mitsubishi stores.
In the next three to five years, the company plans to remove its remaining new-car franchises from its used-car superstores and place them in stand-alone facilities.
Ligon says the company, which had sales of $3.9 billion in its 2003 fiscal year that ended Feb. 28, is shedding the franchises because their locations don't fit that strategy. CarMax operates 15 franchises.
CarMax opened its 42nd used-car superstore in Birmingham, Ala., in June.
The company sold 58,000 used and 5,900 new vehicles in its first fiscal quarter that ended May 31.
Though the used-car business is CarMax's main focus, it has no intention of getting out of the new-car business, Ligon says.
"New cars is a $375 billion industry," he says. "That's equal in size to the used-car business.
"We've got some good (new-car) stores. They are profitable, and we've got some good relationships (with manufacturers), so we want to keep those. And down the road, doing more in new cars will make sense - but not in the near term."
Only three CarMax new-car dealerships are stand-alone stores.
The sale of the Mitsubishi and Ford dealerships is expected to be completed within the next six months and will reduce the retailer's new-car stores to nine.
CarMax also operates two Nissan franchises, two Toyota franchises, one Chevrolet franchise and four Chrysler-Jeep franchises.
CarMax's strategy is a departure from its new-car growth plan in the 1990s. Then, the company's goal was to obtain franchise rights and whenever it could, add the franchise to an existing used-car super store location.
But even then, several manufacturers would not allow their new vehicles to be displayed in the same showroom as used vehicles.
"We've experimented with integrating the new cars into the (used-car super) store." Ligon says. "What we've learned is for us and the manufacturer, it's better, and we're both happier if we can have our new-car business stand alone in a separate facility."
