CarMax broke industry records in 2013 and has successfully grown into a leader in the used car industry. However complications have emerged as a result of duplicators attempting to copy their “no hassle offers” in the highly competitive used car market. Therefore, CarMax’s primary concern is staying ahead of the competition and eliminating threats from potential future disruptions from competitors. Therefore the key question we will try to answer in this analysis of the CarMax case is, can CarMax continue to grow successfully given the threat of new competitors entering the market?
After thorough analysis of the situation, our team has come up with a series of recommendations that will allow CarMax to…show more content… The overall issue for Carmax is their decline in growth. The company would like to continue to expand, but tough, copycat competition is debilitating it’s growth within the country. Their disruptive model allowed them to become the leader within their market. So their fear is that a future company could disrupt their business model, just like Best Buy did to their parent company Circuit City.
Expand the Parts and Service Department: As mentioned in the issue analysis the margin received from this by CarMax is very high. It receives more than 14% than its closest competitor (Penske).
Target Market: Customers who have bought cars from CarMax in the past.
Key Actions: In order to attract more customers to purchase the services and parts from CarMax, they should offer attractive bundles to customers when buying a car. When the customers buy a car, they can include service for an additional fee which will be more lucrative than buying the service individually. This might seem more lucrative for the customer.
Investment Required: In the short term, there would be a very small investment of advertising but as the sector keeps going they would need to stop outsourcing to third parties and build their own parts and service branch which will be capital intensive to