Originally published May 30th, 2005.
With the recent passing of my girlfriend’s 1990 Toyota Celica, she’s been feverishly researching cars and collecting pricing information on used vehicles. As part of her research we took a trip down to the Laurel CarMax  facility to check out the feel of some cars and what we’d expect to pay. If you aren’t familiar with CarMax, and they’re only located in some states so there may not be one near you. But they pride themselves on no-haggle pricing and being a friendly sales environment where they don’t try to pull a fast one on you like traditional horror-story-type dealerships.
As soon as you walk into a CarMax, and if you wander around, you’ll be greeted by one of their sales representatives almost immediately. They’re not forceful but they will ask you if you’re being helped if you wander the dealership alone. How knowledgeable they are about cars depends on the person but the person who helped us, David, was there for three years and had a pretty good understanding about the cars he was showing us.
CarMax sells a large number of used cars, the Laurel, MD location sells the most out of any of them. David told us one month they had a quota of 1,100 cars and crushed it by selling 1,400 – the execs came down and cooked them steak and lobster. The reason CarMax sells so many cars is because they’re valuing turnover and sale frequency over the profit per sale. It’s obvious when you talk to these folks that they aren’t trying to sell you an expensive car, they’re trying to sell you the car you want. Even the sales commission structure works this way.
The commission structure at CarMax works as follows: a salesman makes $150 per sale plus bonuses if they sell warranties, financing plans, etc. Quota at CarMax is ten cars. If you average thirteen cars in a 6 month span, you are part of a Director’s Club. Sell fifteen cars and you’re in the President’s Club. As you join these clubs, the commissions increase so it behooves you to sell as many cars as possible. The quickest way to do that is to match a buyer with the car they want – not try to sell them a car that’s more expensive. A $50,000 car nets the same commission as a $10,000 car – but you can move cheaper cars more often!
Anyway, that gives you an idea of the inner workings. We showed up at the CarMax to find a Honda Civic, Toyota Corolla, or a Saturn of some kind. The Laurel location didn’t have any used Corolla’s or Saturn’s in my girlfriend’s price range and mileage but we did find three Civic’s she was interested in looking at. Another benefit of CarMax is that you can find out what sort of financing they can secure for you in under fifteen minutes without an obligation. After a quick credit check, my girlfriend could get an incredibly crappy rate of 6.45% on a 5 year loan on a Civic ($14k sticker, $4k down). You can always buy the car and secure your own financing within three days without incurring any interest penalties (for them floating the loan to you for three days).
David told us about the CarMax MaxCare Extended Service Plan too – which covers what your typical manufacturer’s 3-year 60,000 mile warranty would cover. This is important because if you’re buying a gently used car, you probably only have a fraction of the manufacturer’s warranty remaining. All you pay is a $75 deductible ($50 if you take it to a CarMax) and it sounds pretty sweet. The price for five years of coverage was a flat price of $1,199 on a $14,000 car – $1,149 for only forty-eight months.
David knew that we weren’t going to buy a car that day (it was pretty obvious) but he was very polite, helped us with all that we needed, and when we thanked him he was very polite. He never made us feel uncomfortable and I appreciated that. We asked for a business card in case we did decided CarMax was the best option and we were on our way.