The actual is $3.05.
2 Likes
Itās said Carmax have a set margin approach, like Costco, which should endear them to consumers. Carmax make about $2200 gross on each vehicle. Iād be happy to pay that mark up for a mint condition well-priced vehicle, but hereās the problem - they arenāt well-priced.
On Cargurus I consistently see the Carmax vehicles labeled as āOverpricedā. Itās possible the other dealers are using teaser prices, and will have substantial add ons. Itās also possible that Carmax have overpaid for inventory.
Itās a good place to get a free vehicle valuation, and test drive a bunch of cars while they do it. Not a great place to buy from, IMO. But Iām not a typical buyer - patient, pay cash.
They are selling over 1.2 million vehicles a year and has close to 5% of market share. Yes, their resale has $2200 gross margin, but it is gross. The real problem is the SGA is 80~85% of that!!! Just like software companies, the SGA is unbelievably high.
This doesnāt look like the writing of Mungofitch from shrewdm.com. I am suspicious that someone may be using his name.
Craig
shrewdm.com is just a year old, and Jimās last post here is over a year ago (May 22) , so which writing are you referring to?
1 Like
Actually this is misleading. For software companies at least part of their SGA is investment in products which will produce revenue, profits in the future, like capital expenses.
For KMX, their SGA should be considered part of ācost of goods soldā, because they are transactional in nature.
1 Like