CarMax's online appraisal tool is less than a year old but has helped the retailer obtain more than 500,000 vehicles for its wholesale and retail business, according to the company's estimates in its second- and third-quarter earnings releases.
The vehicle purchases from consumers helped CarMax for a second consecutive quarter achieve what Nash called "self-sufficiency" above 70 percent. The term refers to the proportion of the company's inventory sourced in-house rather than purchased through third-party vendors. Obtaining vehicles directly from the selling consumer allows CarMax to be more competitive on sticker price, according to Nash.
"We make a lot of online offers," Nash said, estimating that CarMax makes a couple million appraisals each quarter. The company doesn't focus on the proportion of online offers resulting in a purchase, but "we do see some good improvement there" nonetheless, Nash said.
Retail sales to customers that happened fully online rose to make up 9 percent of CarMax's retail volume, compared with 5 percent a year earlier. But the proportion held steady at the 9 percent level recorded in the company's second quarter.
Nash said the volume change still included a "small increase from the last quarter."
CarMax defines online sales as scenarios where a customer remotely reserves a vehicle, creates a sales order for it and adds financing and a trade-in if one or both is desired, Nash said. The majority of customers buying vehicles online still choose to take delivery at a CarMax store, he said.
Nash said profit per vehicle sold to consumers online ran similar to CarMax's overall retail average in the quarter of $2,235, which he called a record.
Meanwhile, 57 percent of customers in the quarter used CarMax's omnichannel option, in which they can seamlessly move between the company's online platform and stores during the car-buying process. The omnichannel share rose from 49 percent during the company's third quarter of 2020.
Nash estimated more than two-thirds of customers can in theory complete a transaction online without an employee's help, up from more than half at last quarter's earnings call.
The increase represents CarMax adding the ability to trade in vehicles without liens online, he said. CarMax plans to add capacity to handle paid transfers and trade-ins with liens online during its fourth quarter, he said.
Offering customers the ability to seamlessly move between online and physical retail represented a "key differentiator for us," Nash said.
CarMax, of Richmond, Va., is No. 1 on Automotive News' list of the top 100 retailers ranked by used-vehicle sales, with retail sales of 832,640 used vehicles in 2020.
