The headline on this article, “Prepare To Deal at CarMax for Your Next Used Car,” is not an endorsement of CarMax, the large used car chain that operates across the country. Rather, it’s my belief that the company makes a lot of money on each used car it sells – so there is lots of room to make a deal.
Way down in its earning statement released yesterday is this tidbit: “Used vehicle gross profit increased to $2,120 per unit from $1,870 per unit in the prior year quarter.” Compare that to this morsel of information from Automotive News in its Sept. 21 edition (subscription required): “The National Automobile Dealers Association says the average net profit per used vehicle sold at new-car dealerships from January through July was $214, up from $161 during the same period last year.”
CarMax doesn’t reveal net profit, but something tells me when your gross profit is 10 times the industry’s net profit, there is room to wiggle. It’s my educated guess the company can still make money with a gross profit of $1000 – so go in there and haggle for that extra $1000 off the sticker price.