Entire article summarizable under “because people pay more per-unit for service equivalent to elsewhere”:
When it comes to gross profit per unit, on average, CarMax raked in $2,147 per vehicle. Lithia Motors wasn’t far behind at $2,038 while other dealer groups such as Asbury, Penske, AutoNation and Sonic had a profit range between $1,565 and $1,090. Startup Carvana only managed to average $902 per unit.
But the fact that CarMax makes is the most profitable used car retailer in the country, is mostly the direct result of buyers often paying more for cars then they could have found elsewhere with a similar “no-haggle” experience
Gross profit per unit doesn’t mean they are the most profitable used car retailer, or even that they are profitable at all.
Gross profit in accounting terms means the price the car sold for, minus the fire that cost of purchasing it. It probably doesn’t include sales or marketing costs, and unclear whether it includes Warranty costs. For example, Carvana is listed at making $900 per car, but a Carvana isn’t profitable at all because of those costs.
So I wonder if CarMax’s gross profit might be overstated because it’s driven by a more expensive base warranty?
When it comes to gross profit per unit, on average, CarMax raked in $2,147 per vehicle. Lithia Motors wasn’t far behind at $2,038 while other dealer groups such as Asbury, Penske, AutoNation and Sonic had a profit range between $1,565 and $1,090. Startup Carvana only managed to average $902 per unit.
But the fact that CarMax makes is the most profitable used car retailer in the country, is mostly the direct result of buyers often paying more for cars then they could have found elsewhere with a similar “no-haggle” experience