|
|
 | | | |
- close
- close
- close
- close
These excerpts taken from the KMX 10-K filed Apr 24, 2009. Industry and
Competition. The U.S. used car marketplace is highly fragmented and
competitive. According to industry sources, in December 2008
there were approximately 20,000 franchised automotive dealerships, who sell both
new and used vehicles. In addition, used vehicles were sold by
approximately 39,000 independent used vehicle dealers, as well as millions of
private individuals. Our primary competitors are the franchised auto
dealers, who sell the majority of late-model used
vehicles. Independent used car dealers predominantly sell older,
higher mileage cars than we do. During fiscal 2009, the recessionary
environment reduced consumers' desire and ability to purchase vehicles, and it
also increased the rate of dealership closures. In the coming year,
while the financial strains of the current economy will likely cause additional
dealerships to close or consolidate at a higher-than-average rate, we expect the
industry to remain highly fragmented.
Based on
industry data, there were more than 36 million used cars sold in the U.S. in
calendar year 2008, of which approximately 16 million were estimated to be
late-model, 1 to 6 year old vehicles. While we are the
largest retailer of used vehicles in the U.S., selling nearly twice as many used
vehicles as the next largest retailer in calendar 2008, we still represented
only approximately 2% of the total late-model used units sold. Over
the last several years, competition has been affected by the increasing use of
Internet-based marketing for both used vehicles and vehicle
financing. In both the used and new vehicle markets, we seek to
distinguish ourselves from traditional dealerships through our consumer offer,
sales approach and other innovative operating strategies.
We
believe that our principal competitive advantages in used vehicle retailing are
our ability to provide a high degree of customer satisfaction with the
car-buying experience; our competitively low prices; our breadth of selection of
the most popular makes and models available both on site and via our website,
carmax.com; the quality of our vehicles; our proprietary information systems;
and the locations of our retail stores. Upon request by a customer,
we will transfer virtually any used vehicle in our nationwide inventory to a
local superstore. Transfer fees may apply, depending on the distance
the vehicle needs to travel. In fiscal 2009, nearly 25% of our
vehicles sold were transferred at customer request. Our
5
Certified
Quality Inspection assures that every vehicle we offer for sale meets stringent
mechanical, electrical and safety standards. We back every vehicle
with a 5-day, money-back guarantee and at least a 30-day limited
warranty. Other competitive advantages include our ability to offer
or arrange customer financing with competitive terms and the comprehensiveness
and cost of the extended service plans we offer. We believe that we
are competitive in all of these areas and that we enjoy advantages over
competitors that employ traditional high-pressure, negotiation-oriented sales
techniques.
Our sales
consultants play a significant role in ensuring a customer-friendly sales
process. A sales consultant is paid a commission based on a fixed
dollars-per-unit standard, thereby earning the same dollar sales commission
regardless of the gross profit on the vehicle being sold. The sales
consultant normally receives no commission on the finance
process. This ensures that the sales consultant’s primary objective
is helping customers find the right vehicles for their needs at prices they can
afford. In contrast, sales and finance personnel at traditional
dealerships typically receive higher commissions for negotiating higher prices
and interest rates, and for steering customers toward vehicles with higher gross
profit.
In the
new vehicle market, we compete with other franchised
dealers. Historically, the new vehicle market has been served
primarily by dealerships employing traditional automotive selling
methods. We believe our customer-friendly, low-pressure sales methods
are points of competitive differentiation.
In our
wholesale auctions, we compete with other automotive auction
houses. We believe our principal competitive advantages include our
high vehicle sales rate, our conditional announcement and arbitration policies,
our broad geographic distribution and our dealer-friendly
practices. Because we own the cars that we auction, we generally sell
between 97% and 100% of the vehicles offered, which is substantially higher than
the sales rate at most other auto auctions. Our policy of making
conditional announcements, noting mechanical and other issues found during our
appraisal process, is also not a typical practice used at other auctions of
older, higher mileage vehicles. Together, these factors make our
auctions attractive to dealers, and they allow us to achieve a dealer-to-car
attendance ratio that is much higher than the typical auto auction.
Industry and
Competition. The U.S. used car marketplace is highly fragmented and
competitive. According to industry sources, in December 2008
there were approximately 20,000 franchised automotive dealerships, who sell both
new and used vehicles. In addition, used vehicles were sold by
approximately 39,000 independent used vehicle dealers, as well as millions of
private individuals. Our primary competitors are the franchised auto
dealers, who sell the majority of late-model used
vehicles. Independent used car dealers predominantly sell older,
higher mileage cars than we do. During fiscal 2009, the recessionary
environment reduced consumers' desire and ability to purchase vehicles, and it
also increased the rate of dealership closures. In the coming year,
while the financial strains of the current economy will likely cause additional
dealerships to close or consolidate at a higher-than-average rate, we expect the
industry to remain highly fragmented.
Based on
industry data, there were more than 36 million used cars sold in the U.S. in
calendar year 2008, of which approximately 16 million were estimated to be
late-model, 1 to 6 year old vehicles. While we are the
largest retailer of used vehicles in the U.S., selling nearly twice as many used
vehicles as the next largest retailer in calendar 2008, we still represented
only approximately 2% of the total late-model used units sold. Over
the last several years, competition has been affected by the increasing use of
Internet-based marketing for both used vehicles and vehicle
financing. In both the used and new vehicle markets, we seek to
distinguish ourselves from traditional dealerships through our consumer offer,
sales approach and other innovative operating strategies.
We
believe that our principal competitive advantages in used vehicle retailing are
our ability to provide a high degree of customer satisfaction with the
car-buying experience; our competitively low prices; our breadth of selection of
the most popular makes and models available both on site and via our website,
carmax.com; the quality of our vehicles; our proprietary information systems;
and the locations of our retail stores. Upon request by a customer,
we will transfer virtually any used vehicle in our nationwide inventory to a
local superstore. Transfer fees may apply, depending on the distance
the vehicle needs to travel. In fiscal 2009, nearly 25% of our
vehicles sold were transferred at customer request. Our
5
Certified
Quality Inspection assures that every vehicle we offer for sale meets stringent
mechanical, electrical and safety standards. We back every vehicle
with a 5-day, money-back guarantee and at least a 30-day limited
warranty. Other competitive advantages include our ability to offer
or arrange customer financing with competitive terms and the comprehensiveness
and cost of the extended service plans we offer. We believe that we
are competitive in all of these areas and that we enjoy advantages over
competitors that employ traditional high-pressure, negotiation-oriented sales
techniques.
Our sales
consultants play a significant role in ensuring a customer-friendly sales
process. A sales consultant is paid a commission based on a fixed
dollars-per-unit standard, thereby earning the same dollar sales commission
regardless of the gross profit on the vehicle being sold. The sales
consultant normally receives no commission on the finance
process. This ensures that the sales consultant’s primary objective
is helping customers find the right vehicles for their needs at prices they can
afford. In contrast, sales and finance personnel at traditional
dealerships typically receive higher commissions for negotiating higher prices
and interest rates, and for steering customers toward vehicles with higher gross
profit.
In the
new vehicle market, we compete with other franchised
dealers. Historically, the new vehicle market has been served
primarily by dealerships employing traditional automotive selling
methods. We believe our customer-friendly, low-pressure sales methods
are points of competitive differentiation.
In our
wholesale auctions, we compete with other automotive auction
houses. We believe our principal competitive advantages include our
high vehicle sales rate, our conditional announcement and arbitration policies,
our broad geographic distribution and our dealer-friendly
practices. Because we own the cars that we auction, we generally sell
between 97% and 100% of the vehicles offered, which is substantially higher than
the sales rate at most other auto auctions. Our policy of making
conditional announcements, noting mechanical and other issues found during our
appraisal process, is also not a typical practice used at other auctions of
older, higher mileage vehicles. Together, these factors make our
auctions attractive to dealers, and they allow us to achieve a dealer-to-car
attendance ratio that is much higher than the typical auto auction.
Industry and Competition. The U.S. used car marketplace is highly fragmented and competitive. According to industry sources, in December 2008 there were approximately 20,000 franchised automotive dealerships, who sell both new and used vehicles. In addition, used vehicles were sold by approximately 39,000 independent used vehicle dealers, as well as millions of private individuals. Our primary competitors are the franchised auto dealers, who sell the majority of late-model used vehicles. Independent used car dealers predominantly sell older, higher mileage cars than we do. During fiscal 2009, the recessionary environment reduced consumers' desire and ability to purchase vehicles, and it also increased the rate of dealership closures. In the coming year, while the financial strains of the current economy will likely cause additional dealerships to close or consolidate at a higher-than-average rate, we expect the industry to remain highly fragmented. Based on industry data, there were more than 36 million used cars sold in the U.S. in calendar year 2008, of which approximately 16 million were estimated to be late-model, 1 to 6 year old vehicles. While we are the largest retailer of used vehicles in the U.S., selling nearly twice as many used vehicles as the next largest retailer in calendar 2008, we still represented only approximately 2% of the total late-model used units sold. Over the last several years, competition has been affected by the increasing use of Internet-based marketing for both used vehicles and vehicle financing. In both the used and new vehicle markets, we seek to distinguish ourselves from traditional dealerships through our consumer offer, sales approach and other innovative operating strategies. We believe that our principal competitive advantages in used vehicle retailing are our ability to provide a high degree of customer satisfaction with the car-buying experience; our competitively low prices; our breadth of selection of the most popular makes and models available both on site and via our website, carmax.com; the quality of our vehicles; our proprietary information systems; and the locations of our retail stores. Upon request by a customer, we will transfer virtually any used vehicle in our nationwide inventory to a local superstore. Transfer fees may apply, depending on the distance the vehicle needs to travel. In fiscal 2009, nearly 25% of our vehicles sold were transferred at customer request. Our 5 Certified Quality Inspection assures that every vehicle we offer for sale meets stringent mechanical, electrical and safety standards. We back every vehicle with a 5-day, money-back guarantee and at least a 30-day limited warranty. Other competitive advantages include our ability to offer or arrange customer financing with competitive terms and the comprehensiveness and cost of the extended service plans we offer. We believe that we are competitive in all of these areas and that we enjoy advantages over competitors that employ traditional high-pressure, negotiation-oriented sales techniques. Our sales consultants play a significant role in ensuring a customer-friendly sales process. A sales consultant is paid a commission based on a fixed dollars-per-unit standard, thereby earning the same dollar sales commission regardless of the gross profit on the vehicle being sold. The sales consultant normally receives no commission on the finance process. This ensures that the sales consultant’s primary objective is helping customers find the right vehicles for their needs at prices they can afford. In contrast, sales and finance personnel at traditional dealerships typically receive higher commissions for negotiating higher prices and interest rates, and for steering customers toward vehicles with higher gross profit. In the new vehicle market, we compete with other franchised dealers. Historically, the new vehicle market has been served primarily by dealerships employing traditional automotive selling methods. We believe our customer-friendly, low-pressure sales methods are points of competitive differentiation. In our wholesale auctions, we compete with other automotive auction houses. We believe our principal competitive advantages include our high vehicle sales rate, our conditional announcement and arbitration policies, our broad geographic distribution and our dealer-friendly practices. Because we own the cars that we auction, we generally sell between 97% and 100% of the vehicles offered, which is substantially higher than the sales rate at most other auto auctions. Our policy of making conditional announcements, noting mechanical and other issues found during our appraisal process, is also not a typical practice used at other auctions of older, higher mileage vehicles. Together, these factors make our auctions attractive to dealers, and they allow us to achieve a dealer-to-car attendance ratio that is much higher than the typical auto auction. Industry and Competition. The U.S. used car marketplace is highly fragmented and competitive. According to industry sources, in December 2008 there were approximately 20,000 franchised automotive dealerships, who sell both new and used vehicles. In addition, used vehicles were sold by approximately 39,000 independent used vehicle dealers, as well as millions of private individuals. Our primary competitors are the franchised auto dealers, who sell the majority of late-model used vehicles. Independent used car dealers predominantly sell older, higher mileage cars than we do. During fiscal 2009, the recessionary environment reduced consumers' desire and ability to purchase vehicles, and it also increased the rate of dealership closures. In the coming year, while the financial strains of the current economy will likely cause additional dealerships to close or consolidate at a higher-than-average rate, we expect the industry to remain highly fragmented. Based on industry data, there were more than 36 million used cars sold in the U.S. in calendar year 2008, of which approximately 16 million were estimated to be late-model, 1 to 6 year old vehicles. While we are the largest retailer of used vehicles in the U.S., selling nearly twice as many used vehicles as the next largest retailer in calendar 2008, we still represented only approximately 2% of the total late-model used units sold. Over the last several years, competition has been affected by the increasing use of Internet-based marketing for both used vehicles and vehicle financing. In both the used and new vehicle markets, we seek to distinguish ourselves from traditional dealerships through our consumer offer, sales approach and other innovative operating strategies. We believe that our principal competitive advantages in used vehicle retailing are our ability to provide a high degree of customer satisfaction with the car-buying experience; our competitively low prices; our breadth of selection of the most popular makes and models available both on site and via our website, carmax.com; the quality of our vehicles; our proprietary information systems; and the locations of our retail stores. Upon request by a customer, we will transfer virtually any used vehicle in our nationwide inventory to a local superstore. Transfer fees may apply, depending on the distance the vehicle needs to travel. In fiscal 2009, nearly 25% of our vehicles sold were transferred at customer request. Our 5 Certified Quality Inspection assures that every vehicle we offer for sale meets stringent mechanical, electrical and safety standards. We back every vehicle with a 5-day, money-back guarantee and at least a 30-day limited warranty. Other competitive advantages include our ability to offer or arrange customer financing with competitive terms and the comprehensiveness and cost of the extended service plans we offer. We believe that we are competitive in all of these areas and that we enjoy advantages over competitors that employ traditional high-pressure, negotiation-oriented sales techniques. Our sales consultants play a significant role in ensuring a customer-friendly sales process. A sales consultant is paid a commission based on a fixed dollars-per-unit standard, thereby earning the same dollar sales commission regardless of the gross profit on the vehicle being sold. The sales consultant normally receives no commission on the finance process. This ensures that the sales consultant’s primary objective is helping customers find the right vehicles for their needs at prices they can afford. In contrast, sales and finance personnel at traditional dealerships typically receive higher commissions for negotiating higher prices and interest rates, and for steering customers toward vehicles with higher gross profit. In the new vehicle market, we compete with other franchised dealers. Historically, the new vehicle market has been served primarily by dealerships employing traditional automotive selling methods. We believe our customer-friendly, low-pressure sales methods are points of competitive differentiation. In our wholesale auctions, we compete with other automotive auction houses. We believe our principal competitive advantages include our high vehicle sales rate, our conditional announcement and arbitration policies, our broad geographic distribution and our dealer-friendly practices. Because we own the cars that we auction, we generally sell between 97% and 100% of the vehicles offered, which is substantially higher than the sales rate at most other auto auctions. Our policy of making conditional announcements, noting mechanical and other issues found during our appraisal process, is also not a typical practice used at other auctions of older, higher mileage vehicles. Together, these factors make our auctions attractive to dealers, and they allow us to achieve a dealer-to-car attendance ratio that is much higher than the typical auto auction. These excerpts taken from the KMX 10-K filed Apr 25, 2008. Industry and
Competition. With calendar year 2007 sales of approximately
$340 billion, used vehicles comprise nearly half of the U.S. auto retail market,
the largest retail segment of the economy. In calendar 2007, there
were an estimated 41.4 million used vehicles sold in the U.S. compared with
approximately 16.2 million new vehicles. Late-model vehicles that are
1 to 6 years old, our primary focus, are estimated at approximately $275 billion
in annual sales and 19 million units per year.
The U.S.
used car marketplace is highly fragmented and competitive, and includes
approximately 21,500 franchised new car dealers and 43,000 independent used
car dealers, as well as millions of private individuals. Our primary
competitors are the franchised new car dealers, who sell the majority of
late-model used vehicles. Independent used car dealers predominantly
sell older, higher mileage cars than we do. Competition has been
affected by the increasing use of Internet-based marketing for both used
vehicles and vehicle financing. In both the used and new vehicle
markets, we seek to distinguish ourselves from traditional dealerships through
our consumer offer, sales approach and other innovative operating
strategies.
We
believe that our principal competitive factors in used vehicle retailing are our
ability to provide a high degree of customer satisfaction with the car-buying
experience; our competitively low prices; our breadth of selection of the most
popular makes and models available both on site and via our website, carmax.com;
the quality of our vehicles; our proprietary information systems; and the
locations of our retail stores. Upon request by a customer, we will
transfer virtually any used vehicle in our nationwide inventory to a local
superstore. Transfers are free within a market; longer distance
transfers include a charge to cover transportation costs. In fiscal
2008, more than 20% of our vehicles sold were transferred at customer
request. Our Certified Quality Inspection assures that every vehicle
we offer for sale meets stringent mechanical, electrical and safety
standards. We back every vehicle with a 5-day,
money-back
guarantee
and at least a 30-day limited warranty. Other competitive factors
include our ability to offer or arrange customer financing with competitive
terms and the comprehensiveness and cost of the extended service plans we
offer. We believe that we are competitive in all of these areas and
that we enjoy advantages over competitors that employ traditional high-pressure,
negotiation-oriented sales techniques.
Our sales
consultants play a significant role in ensuring a customer-friendly sales
process. A sales consultant is paid a commission based on a fixed
dollars-per-unit standard, thereby earning the same dollar sales commission
regardless of the gross margin on the vehicle being sold. The sales
consultant normally receives no commission on the finance
process. This ensures that the sales consultant’s primary objective
is helping customers find the right vehicles for their needs at prices they can
afford. In contrast, sales and finance personnel at traditional
dealerships typically receive higher commissions for negotiating higher prices
and interest rates, and for steering customers toward vehicles with higher gross
margins.
In the
new vehicle market, we compete with other franchised
dealers. Historically, the new vehicle market has been served
primarily by dealerships employing traditional automotive selling
methods. We believe our customer-friendly, low-pressure sales methods
are points of competitive differentiation.
Industry and Competition. With calendar year 2007 sales of approximately $340 billion, used vehicles comprise nearly half of the U.S. auto retail market, the largest retail segment of the economy. In calendar 2007, there were an estimated 41.4 million used vehicles sold in the U.S. compared with approximately 16.2 million new vehicles. Late-model vehicles that are 1 to 6 years old, our primary focus, are estimated at approximately $275 billion in annual sales and 19 million units per year. The U.S. used car marketplace is highly fragmented and competitive, and includes approximately 21,500 franchised new car dealers and 43,000 independent used car dealers, as well as millions of private individuals. Our primary competitors are the franchised new car dealers, who sell the majority of late-model used vehicles. Independent used car dealers predominantly sell older, higher mileage cars than we do. Competition has been affected by the increasing use of Internet-based marketing for both used vehicles and vehicle financing. In both the used and new vehicle markets, we seek to distinguish ourselves from traditional dealerships through our consumer offer, sales approach and other innovative operating strategies. We believe that our principal competitive factors in used vehicle retailing are our ability to provide a high degree of customer satisfaction with the car-buying experience; our competitively low prices; our breadth of selection of the most popular makes and models available both on site and via our website, carmax.com; the quality of our vehicles; our proprietary information systems; and the locations of our retail stores. Upon request by a customer, we will transfer virtually any used vehicle in our nationwide inventory to a local superstore. Transfers are free within a market; longer distance transfers include a charge to cover transportation costs. In fiscal 2008, more than 20% of our vehicles sold were transferred at customer request. Our Certified Quality Inspection assures that every vehicle we offer for sale meets stringent mechanical, electrical and safety standards. We back every vehicle with a 5-day, money-back guarantee and at least a 30-day limited warranty. Other competitive factors include our ability to offer or arrange customer financing with competitive terms and the comprehensiveness and cost of the extended service plans we offer. We believe that we are competitive in all of these areas and that we enjoy advantages over competitors that employ traditional high-pressure, negotiation-oriented sales techniques. Our sales consultants play a significant role in ensuring a customer-friendly sales process. A sales consultant is paid a commission based on a fixed dollars-per-unit standard, thereby earning the same dollar sales commission regardless of the gross margin on the vehicle being sold. The sales consultant normally receives no commission on the finance process. This ensures that the sales consultant’s primary objective is helping customers find the right vehicles for their needs at prices they can afford. In contrast, sales and finance personnel at traditional dealerships typically receive higher commissions for negotiating higher prices and interest rates, and for steering customers toward vehicles with higher gross margins. In the new vehicle market, we compete with other franchised dealers. Historically, the new vehicle market has been served primarily by dealerships employing traditional automotive selling methods. We believe our customer-friendly, low-pressure sales methods are points of competitive differentiation. | EXCERPTS ON THIS PAGE:
RELATED TOPICS for KMX: |
| |||||||
