CarMax Competition
Now Viewing CarMax's competition in: Automobile Dealerships (primary)
Recent Developments
Leasing Options Lessen - Leading US car makers and banks are abandoning the auto leasing business, taking from auto dealers a valuable tool to sell new cars and trucks. Chrysler Financial is getting out of the leasing business altogether, while GM's financial arm, GMAC, is cutting its leasing business in half, and Ford is reducing the number it offers. Auto leasers are losing money as trucks and SUVs coming off lease aren't holding their value. Leasing had comprised about 20 percent of US auto industry sales.
Auto Sales Continue Downward Spiral - Car makers' auto sales numbers have reached lows not seen in the US since 1992. Overall July 2008 sales were down 13 percent from July 2007. Detroit's Big Three automakers had their lowest combined market share in history, at 43.4 percent. Industry analysts point to exorbitant fuel prices, fear of oil availability, tight credit, rising unemployment, and slow economic growth as culprits for waning sales.
NADA Fighting Dirty Business of Cleaning Titles - The NADA wants federal legislation to combat car title fraud. "Title washing" is the practice of taking wrecked, flooded, and stolen autos, then repairing and reselling them with titles washed clean of previous information. The National Insurance Crime Bureau (NICB) took a step toward protecting dealers and buyers from title washing when it established a database of vehicle identification numbers. However, the database excludes rental cars, self-insured fleets, and autos insured by companies that don't belong to NICB.
Competitive Landscape
Consumer spending and interest rates drive demand. The profitability of individual companies depends on the volume and mix of cars and services sold. Large companies can offer a wider selection of cars and have advantages in marketing, purchasing, and finance. Small companies can compete effectively by offering superior customer service or serving a local market. Annual revenue per worker averages $600,000 for new car dealerships and $700,000 for used.
Automobile Dealerships Industry Forecast
from Hoover's/D&B subsidiary First Research
US personal consumption expenditures for new and used autos and other motor vehicles are forecast to grow at an annual compounded rate of 4.1 percent between 2007 and 2012.
Consumer Spending Growth on Autos Steadies
First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.
First Research Opportunity Rating
The First Research Opportunity Rating is First Research's estimate of industry performance vs. industry risk over the next 12 to 24 months.
- Demand: Tied to consumer income
- Need low-cost financing, customer support
- Risk: Slowing economy limits spending on non-essentials
Industries Where CarMax Competes
- Retail
- Automobile Dealers (primary)
