Asking someone to think about buying a used car can conjure a lot of images: shaking hands, bad coffee in styrofoam cups, awkward conversations during test drives, and waiting while your salesman speaks to a manager. CarMax ($NYSE:KMX), America's largest used car dealership, has been challenging those preconceived notions since its 1996 founding in Richmond, VA as a Circuit City subsidiary.
As the world adapts to the unique demands and pressures of the COVID-19 Pandemic, forward-facing companies are required to alter their business models. Companies with multi-channel consumer interaction and engagement, such as Best Buy, are better equipped than those less able to adapt to sheltering-in-place and social distancing (see: AMC Theaters).
But CarMax hasn't been weathering the storm so well:
Hiring freezes had been officially announced alongside the furlough on April 10, yet our data shows a steep drop in Job Postings in early March. Stock prices have correspondingly decreased but leveled off as the various changes above were announced and implemented. The CEO, Bill Nash, has taken a 50% pay cut, and the Board of Directors have also similarly reduced their salary indefinitely.
Recently in the headlines for furloughing over 15,000 workers as of April 20, and closing half of its physical locations, CarMax has also garnered attention for attempting to stay ahead of the curve by covering the employee portion of medical insurance plans of those who were participating in the plan before the furlough. CarMax's official statement regarding the Coronavirus can be found here. In summary, the steps implemented include a "handshake-free" policy, solo test drives, payment assistance for existing customers, and extension of the 90-day Limited Warranty.
But things aren't over for CarMax, not by any shot. The company is offering a no-contact "Curbside" program that helps customers maintain social distancing while shopping for cars.
We reached out to CarMax for clarity on the new CarMax Curbside program and whether or not there were associates physically on-site if locations were presently open.
"Many customers are seeking alternative ways to shop for vital essentials," a company spokesperson told us. "Reliable transportation is critically important right now, and we support customers who need to buy a vehicle, get repairs, or sell us their car if necessary. That's why CarMax is enhancing its online shopping capabilities to include socially distanced and contactless curbside pickup at most open stores nationwide."
Meanwhile, inventory at CarMax appears to have softened a bit. It's unclear if this is a longer trend or if it's a function of fewer personnel to add cars to the inventory. It is plausible — even probable — that fewer people are bringing their cars in for a sale or trade.
"CarMax Curbside enables customers to complete the car buying and selling experience outside the store with adherence to social distancing practices. Customers save time by completing most of the process online or over the phone in advance - including selecting a vehicle, getting pre-approved for financing, and getting at trade-in offer on an existing vehicle, if applicable. CarMax is sanitizing high-touch areas of vehicles, including during appraisals and before and after test drives and vehicle repairs. Appointment online: at some CarMax stores, customers are required to schedule appointments before visiting. Occupancy restrictions vary by locality."
CarMax is a company that has built its reputation and image on transparency and a no-hassle approach. Corporate policy in response to the Coronavirus appears to follow this model, trimming fat and adapting practices to protect associates and consumers alike. We watch with interest to see if these practices go far enough or how the market responds as the Pandemic continues.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.