Specialist
Former regional VP at CarMax
Agenda
- Key trends and developments in the US auto dealership and used car industry, focusing on CarMax (NYSE: KMX), Carvana (NYSE: CVNA) and Vroom (NASDAQ: VRM)
- Demand expectations and digital vs physical sales growth trends
- CarMax’s profitability amid inventory and sourcing pressures and competition with Carvana, auction houses and other players
- Mid-to-long-term outlook
Questions
1.
What are 2-3 key trends you’ve been following in the industry?
2.
You mentioned thinking CarMax is best set up to source inventory to peers. What is the company doing better than Carvana, Vroom and the landscape that puts it in the best position to source cars?
3.
How impactful do you think CarMax’s acquisition of Edmunds in April 2021 has been to the company’s online car-buying efforts? Would you note any meaningful benefits from the Edmunds acquisition other than inventory online procurement?
4.
Carvana and Vroom will pick up a trade-in or wholesale vehicle from a customer. Is this an important service for CarMax to provide? How far away is the company from launching this capability?
5.
It seems Carvana has really pushed CarMax into omnichannel retailing experience. Why might the company be taking so long to roll this out? Is it just because of customer preferences or should we consider other factors?
6.
How far away is CarMax from offering home delivery to all customers, rather than just those within 60 miles of certain stores?
7.
What are your thoughts on Driveway from Lithia, considering the potential for other omnichannel initiatives from traditional dealers? Could this be a formidable competitor in time? Are there any other traditional dealers to monitor?
8.
Could Vroom or Shift achieve sales or market share parity with Carvana or CarMax in the next five years?
9.
Do you think e-commerce in the auto dealership and used car industry is a winner-takes-all proposition?
10.
What is the price positioning of CarMax, Carvana and Vroom? At launch, Carvana appeared to offer pricing at a discount to CarMax. In recent years, some data suggests there’s very similar pricing on like-for-like vehicles.
11.
CarMax’s 30-day guarantee really leverages its store infrastructure. What additional advantages could it gain by leveraging its store base and infrastructure?
12.
What are your thoughts on CarMax’s longer-term profitability relative to Carvana’s? Which model do you expect to be more profitable longer term?
13.
Some say there is a gap in between CarMax and Carvana’s online customer experience. Would you agree? Does CarMax need to close any key capabilities to be on par with Carvana’s online customer experience?
14.
With CarMax’s move deeper into auctions, do you expect Carvana to pursue this avenue as well? Over what timeframe might that occur?
15.
How great of a threat is CarMax to auction houses?
16.
Could you estimate the per-unit profitability difference between cars sourced from customers and auctions?
17.
Might Carvana have a better customer sourcing ability than CarMax, or would you consider it as the opposite?
18.
You mentioned expecting more M&A similar to the Edmunds acquisition. Are there any obvious or attractive targets for CarMax to bring into the fold?
19.
You were fairly positive on CarMax’s culture. What are your thoughts on management and how would you characterise its ability to execute? Would you do anything differently if you were in charge?
20.
Could you summarise your thoughts on CarMax? What are the best- and worst-case scenarios for the company over the next 12-18 months?
