The average American car owner has likely heard about CarMax. Between the advertising campaigns and stories exchanged by previous customers, CarMax has become one of the best-known dealers of automobiles in the U.S.A. However, they're not the only company that has a niche in the market. There are at least twenty other companies that are similar to CarMax.
CarMax, Inc. is a retailer of used vehicles that runs its base of operations in the United States. It has two business segments. The first is the CarMax Sales Operations and the second is CarMax Auto Finance. The headquarters of CarMax is in Richmond, Virginia. However, the auto finance department operates from Kennesaw, Georgia.
CarMax was formed by Circuit City Stores, Inc. while Richard L. Sharp was still the company's chief executive officer. As Project X, it was also known as Honest Rick's Used Cars among the inner circle of the skunkworks team in 1991. The concept behind CarMax originally came from Ronald l. Moore, a consultant from Richmond who was assigned to evaluate potential business opportunities that ventured beyond consumer electronics.
The first CarMax retail location opened up in Richmond, Virginia, in September 1993. Since then it has expanded to 225 locations throughout the U.S. In the beginning, the business model had no fees. This changed after it was determined customers didn't seem so concerned about paying transaction fees when it came to purchasing a vehicle.
On average, a CarMax retail location measures about 59,000 square feet and carries an inventory of at least three hundred vehicles. Upon the sale of each vehicle, CarMax offers a ninety-day warranty, plus a thirty-day money-back guarantee. The customer also has up to three days to change the financing at no charge should they feel the need to do so.
Although they're the nation's largest used car retailer, CarMax is not alone as a seller. With customers continually shifting their shopping habits, there has been a surge of online-only companies that have managed to get in on the action. There are twenty companies that come to mind that share the same business model as the company that opened up its first shop in 1993.
1. Asbury Automotive Group
Founded by David W. Hult, Asbury Automotive Group has been in the business as an automotive dealership since 1995. Headquartered in Atlanta's Duluth, Georgia, it is the seventh largest automotive distributor in the U.S. with over eighty dealerships and ninety-six franchise locations.
2. Auto Trader
There are very few households that haven't heard of Auto Trader. In 1997, this quickly became the "it place" as a platform for buyers and sellers of automobiles to do business, Auto Trader had regular publications that were accessible to anyone who wanted to see what's been listed.
Also referred to as Autotrader, this company belongs to Cox Automotive, which in turn is owned by Cox Enterprises. Online, it shares the same business model as CarMax. However, it doesn't have a physical location. Auto Trader behaves as a go-between rather than a direct dealership.
AutoNation has been in business since 1996 as a seller of new and used automobiles. Just like CarMax, it offers an e-commerce platform that allows buyers and sellers to wheel and deal according to personal preference. Like CarMax, the reach of AutoNation is extensive with its access to the American consumers that are interested in either buying, selling, or trading a vehicle.
4. Bridgecrest Acceptance Corporation
Bridgecrest Acceptance Corporation is a sister company belonging to DriveTime Automotive Group Inc. It operates much like CarMax as it caters to customers who are in need of vehicle financing. It behaves as an in-house financing option for customers dealing with DriveTime, as well as its affiliates and associates.
Headquartered in Centreville, Virginia, Carfax is a web-based service that provides information about a vehicle's history. This has become an important resource for buyers, sellers, and vehicle service technicians.
So how similar is Carfax to CarMax? Not only does Carfax provide important information about a vehicle but how to gain access to them as an interested buyer. This is a service both Americans and Canadians have made good use of as discerning buyers want to make sure they're buying a quality vehicle.
Headquartered in Chicago, Illinois, Cars.com is a website that has served as a car classifieds ad site since 1998. This is one of the most respected advertising companies that specialize in vehicle listings. Cars.com is a subsidiary that belongs to DR Media Holdings.
The goal behind Cars.com is to connect buyers and sellers together. Dealerships have made good use of its services that put them in the same league as CarMax when it comes to offering a large inventory of vehicles. Also like CarMax, financing options are included on the site as resources consumers can access as needed.
Cars.com and Auto Trader actually have more in common with each other. Still, they both serve as similar services that CarMax offers, at least as far as online car shopping is concerned.
Based in Tempe, Arizona, Carvana is an online used car retailer that's been recognized in 2021 by the Fortune 500 as the fastest growing of its kind. It was founded by Ernest Garcia III, Ben Huston, and Ryan Keeton in 2012. The financing for this company was made possible by DriveTime, which is another used car retailer and finance company.
Carvana opened its first iteration of a car vending machine in November 2013. Two years later, it became a fully automated commemorative coin-operated version in Nashville, Tennessee.
In 2017, Carvana acquired its rival, Calypso as soon as it went public and began trading on the New York Stock Exchange. The acquisition enabled Carvana to enhance vehicle data and analytical tools. In 2018, it added Car360 to its business portfolio. Car360 offers smartphone technology for taking vehicle photos with 3D computer vision, machine learning, and augmented reality.
When the COVID-19 pandemic swept across the American nation, Carvana capitalized on an opportunity to offer touchless delivery and pick-up as of March 2020. This resulted in a twenty-five percent increase in vehicle sales as physical car dealerships were forced to close their doors. Because of this, Carvana was able to expand operations that now have them operating thirty-two vending machines across the U.S.
Founded in 1982, Copart behaves as an auto auction and car dealership with online and offline connections. Just like CarMax, it specializes as a seller of previously owned vehicles. Its base of operations is in Dallas, Texas. Like CarMax, Copart offers financing options to interested buyers who require a payment plan in order to take complete a vehicle purchase.
Since COVID-19, Copart has invested more resources into operating as an e-commerce business. This includes arranging the delivery of a purchased vehicle for the customer's convenience.
9. Cox Enterprises
Auto Trader.com and Kelley Blue Book are owned by Cox Enterprises. This car valuation and research company also bought a stake in Go Financial. Founded in 2011 before becoming its own company in 2013, Cox has access to 2,800 dealerships across forty-six American states. The base model of Cox Enterprises operates much like CarMax when it comes to offering a series of options when it comes to car buying and financing.
Founded in 1898 by James M. Cox, the company was first based in Dayton, Ohio. The commercial and political reach Cox Enterprises has is vast. Cox Automotive is part of the Cox Enterprises business model which serves as a provider of vehicle remarketing services and digital marketing for dealers and consumers.
10. DriveTime Automotive Group Inc.
DriveTime Automotive Group Inc. is based out of Tempe, Arizona. It is also a major shareholder of Carvana, which began as a spinoff in 2012. Before becoming DriveTime in 2002, the company was originally founded in 1977 as Ugly Duckling. In 1991, the company was purchased by Ernest Garcia II. Originally, this was a car rental company before changing its business model that shares the same characteristics as CarMax.
Just like CarMax, DriveTime sells and finances vehicles to customers throughout the United States. With about 145 locations across the nation, DriveTime's niche is selling previously owned vehicles to car buyers. The proprietary credit scoring model is used for customers to finance car purchases at in-house dealership rates.
DriveTime acquires its vehicles through various auctions. From there, each vehicle undergoes a thorough fourteen-day inspection. Once each vehicle becomes a sellable product, it is sent to a DriveTime-affiliated dealership.
From DriveTime's camp, a series of startup companies sprung up. Just like Carvana, Bridgecrest Acceptance Corporation, Go Financial, and SilverRock Group have spawned as sister companies. Although separate entities, these companies also work together. As a team, they're among CarMax's biggest competitors when it comes to convincing customers to do business with them.
11. Enterprise Car Sales
Founded in 1962 by Jack Taylor as Enterprise Rent-A-Car, Enterprise Car Sales has since emerged as one of America's most renowned used car retailers. With over 120 locations, this subsidiary of Enterprise Holdings features an inventory that has over 250 different models of previously used vehicles customers can inquire about.
As a multi-brand buyer distribution service, Inchcape is a notable CarMax competitor that operates in a similar manner. This is a British-based operation hailing out of London, England that's been in business since 1847. The reason why Inchcape deserves mention is this is the global equivalent of what CarMax offers to its American customer base.
13. KAR Auction Services, Inc.
KAR Auction Services, Inc. is owned and operated by Kar Global. The base of operations has been in Carmel, Indiana since it was founded as a company in 1989. Currently, its niche as an auctioneer of vehicles reaches out to consumers throughout North America, Europe, and the U.K.
While KAR is technically an auction site, Kar Global has also been an innovator when it comes to marketing and remarketing. Products are developed by a wide range of banks, leasing companies, and dealerships. This means interested buyers don't necessarily have to place a bid as if they're at an auction, competing against another bidder. The e-commerce platform also gives potential buyers access to resources that promise to have what they're looking for as a vehicle according to their personal budget.
14. Lithia Motors, Inc.
Lithia Motors, Inc. operates as a retail automotive retailer. Its base of operations is in Medford, Oregon. Since its founding in 1946 by Walt DeBoer, it has become the third largest vehicle retailer in the U.S. with 180 locations across eighteen states.
Like CarMax, Lithia Motors has an e-commerce platform that enables customers to inquire, buy, sell, and trade vehicles. It also offers a series of financing options to interested buyers as they make their vehicular purchase.
Manheim is a subsidiary belonging to Cox Enterprises. It is one of the top car remarketing companies in the U.S. as it offers buyers and sellers access to the most prominent car exchange network. Manheim has over 115 digital and physical locations that work with dealers, mobile auctions, and businesses that have a niche in the automotive sales industry.
16. Penske Automotive Group, Inc.
Since 1990, Penske Automotive Group, Inc. has been serving its customers as a diversified international transportation services company. It is one of the world's premier automotive and commercial truck retailers. The global reach Penske has makes this one of the largest retailers in North America.
Penske is also a member of the Fortune 500, Russell 1000, and Russell 3000 indexes and is ranked as one of the world's most admired companies, at least according to Fortune Magazine. The reputation of Penske has been stellar by its collection of customers and staff members.
17. Shift Technologies
Operating as an online marketplace that specializes in buying and selling used cars is Shift Technologies. The base of operations is located in San Francisco, California. Currently, this company can be accessed by customers living in California, Oregon, Texas, and Washington.
Founded in 2013 by George Arison and a handful of investors, it officially became incorporated in 2014. It then launched its first market in San Francisco in 2015, originally serving as an intermediary that bought and sold used cars on consignment.
After Shift Technologies began to purchase cars directly, then reselling them on its own platform straight to the buyers, this put an end to the peer-to-peer consignment setup it had previously. In 2020, it merged with Insurance Acquisition Corp. Since doing so, there's also been talk of Shift Technologies merging with CarLotz, which is a used vehicle consignment company.
The business model of Shift Technologies is the same as CarMax. It offers an opportunity for consumers to buy and sell vehicles through its e-commerce platform. Each purchase comes with a limited seven-day return policy and a thirty-day powertrain guarantee.
18. Sonic Automotive
Since 1997, Sonic Automotive from Charlotte, North Carolina, has been in the business of buying and selling vehicles to the American public. Currently, it has over one hundred locations. Although Sonic is much smaller than CarMax it still offers the same business platform.
The growth of Sonic has been slow and steady with no sign of slowing down anytime soon. Many consumers find the personal touch of Sonic is superior to the corporate feel that comes from CarMax.
TrueCar.com operates as an online resource that's been accessed by several dealerships as a means to acquire new leads and customers. It's also been accessed by consumers as a source of information about vehicles they wish to inquire about. It also provides information on how to access vehicles of interest in their area.
Based out of Santa Monica, California, TrueCar serves as a link between buyers and sellers with a business platform not much different than what CarMax uses.
Based in New York City, Vroom is a used car retailer that also uses e-commerce as a means to reach out to consumers. As an online business, it reaches out to customers across the nation as a buyer, seller, and financer.
Originally founded as AutoAmerica in 2013 by Kevin Westfall and Marshall Chesrown, the company was renamed Vroom in 2014 after Ellie Wurtman and Allon Bloch joined as co-founders. These changes included the introduction of a technological platform, as well as a refurbishment facility in Stafford, Texas.
In 2015, Forbes listed Vroom as one of the hottest e-commerce startups. That same year also saw Vroom purchase Texas Direct Auto. However, Texas Direct Auto still operates as its own brand.
What Vroom does is handle the entire transaction with its e-commerce platform instead of operating like a peer-to-peer marketplace. Buyers have up to seven days to cash in on the money-back guarantee and ninety days of bumper-to-bumper warranty. The business model of Vroom is similar to CarMax's when it comes to buying, selling, and financing the customers that access its retail platform.
Written by Allen Lee
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