Top 10 CarMax Competitors In 2023

CarMax is an American retailer of both new and used cars. The company was founded in 1993 as a subsidiary company of Circuit City Stores. It is headquartered in Richmond, Virginia. CarMax operates over 215 locations within the United States and has sold more than 9 million cars to date. It is the largest used-car dealer in the US. In 2019 alone, CarMax sold almost 830,000 used cars. The company has 27,050 employees. Its revenue in the last financial year was $20.32 billion.

CarMax similar companies:

Copart, Penske Automotive Group, AutoNation, Inchcape, Sonic Automotive, Asbury Automotive Group, Carvana, Lithia Motors, Autotrader, and Cars.com

Who Is CarMax’s Biggest Competitor?

Penske Automotive Group is CarMax’s biggest competitor. It is the largest car dealership company in the US in terms of revenue and the third-largest retailer of used cars. Its revenue for 2019 was $23.17 billion. The company was founded in 1990 and is headquartered in Bloomfield Hills, Michigan. It has operations in the US, Canada, and Western Europe.

How CarMax Makes Money

CarMax is a retailer for both used and new cars in the United States. It offers customers a range of vehicle models and makes including domestic, imported, and luxury vehicles. The company makes money from two primary business segments- CarMax Sales Operations and CarMax Auto Finance. 

CarMax Sales Operations

In this segment, CarMax purchases used vehicles from owners and other sources and sells them at fixed no-haggle prices. It inspects the vehicles to ensure they meet quality standards before they are offered for sale. Vehicles that do not meet the required standards are sold through auctions to licensed dealers. The company also sells other related products and services.

In addition to selling used cars, CarMax has franchise agreements at two locations where it sells brand new vehicles. The company sold 832,640 units of vehicles in the 2020 financial year. 

CarMax Auto Finance

The company provides financing to retail customers who need it through third-party finance providers. This depends on the customer’s credit history and other data. It gives CarMax additional revenue and profits. In the last financial year. CarMax Auto Finance brought in $456 million in revenues.

Copart

Copart was founded in 1982 by Willis Johnson. The company is headquartered in Dallas, Texas. It provides online vehicle auction and remarketing services in the US, Canada, the UK, Germany, Ireland, Spain, Finland, Brazil, and the UAE. Copart’s primary buyers are used vehicle dealers, exporters, rebuilders, and dismantlers. It also sells to individual buyers. Insurance companies, car rental companies, fleet managers, government agencies, vehicle dealers, and other institutions make up the largest sellers of vehicles to Copart. As of 2019, the company had 7,327 employees and a revenue turnover of $2.04 billion.

While both Copart and CarMax sell vehicles, Copart is more of a car auction store while CarMax is a vehicle listing store. Copart majorly deals with other businesses in the auto resale industry even though it also sells to individual buyers. On the other hand, CarMax primarily sells to individual buyers. In terms of revenue, CarMax made about 10 times what Copart made in 2019.

Penske Automotive Group

Penske Automotive Group was founded in 1990 as United Automotive Group. Penske Corporation acquired the company in 1997 and rebranded it to Penske Automotive Group in 2007. Headquartered in Bloomfield Hills, Michigan, the company offers automotive dealership services, vehicle parts, and vehicle shipping services. It sells both used and new cars. Penske Automotive has operations in the US, Canada, and Western Europe. Penske Automotive has 26,980 employees. Its revenue for 2019 was $23.17 billion.

Penske Automotive is one of CarMax’s top competitors in the industry. It slightly made more revenue than CarMax in 2019. While Penske Automotive is the second-largest retailer of brand new vehicles in the US, it announced last year that it is expanding its standalone used-vehicle stores to boost its revenue and profits. Whether this will help to widen the gap between itself and CarMax remains to be seen.

AutoNation

AutoNation was founded by Wayne Huizenga in 1996. The company provides automotive dealership services and also sells used vehicles. The vehicles are inspected and certified before being sold to buyers. Headquartered in Fort Lauderdale, Florida, AutoNation operates more than 360 locations in the United States. As of 2019, the company had 25,000 employees and a revenue turnover of $21.33 billion.

CarMax is America’s largest retailer of used cars. On the other hand, AutoNation earned most of its revenue in 2019 from the sale of new vehicles. New vehicle sales in 2019 accounted for 54.9% of its revenue while used vehicles only made up 23.9% of the revenue. Parts and services contributed 16.1% while financing and insurance brought in 4.6% of the revenue. In terms of revenue, the two companies are almost at the same level, with AutoNation having a slight advantage over CarMax.

Inchcape

Inchcape was founded in 1847 by William Mackinnon and Robert Mackenzie in Calcutta under the name Mackinnon Mackenzie & Company (MMC). In the 1950s, it was renamed to Inchcape and Company before reincorporation Inchcape PLC in 1981. The company provides automotive retail and distribution services. Headquartered in London, UK, Inchcape has a presence in 33 countries across Europe, Africa, South America, Asia, and Australia. The company employs 17,300 people and posted a revenue turnover of $12.45 billion.

Inchcape does not have a presence in North America. But it operates in 33 other countries around the world where it sells new and used cars, vehicle parts, and also offers vehicle finance and insurance among other services. If Inchcape sets foot in the US, it will have to face the used-cars powerhouse that is CarMax. Otherwise, it will have to wait for CarMax to expand beyond the US borders to fight for the global crown.

Sonic Automotive

Sonic Automotive was founded in 1997 by Bruton Smith with only 20 stores in operation. It has since grown into the 4th largest automotive retailer in the US. The company now operates over 110 stores and sells about 25 brands of vehicles. Headquartered in Charlotte, North Carolina, Sonic Automotive has a presence in 14 states in the US. As of 2019, the company had 9,300 employees and a revenue turnover of $10.45 billion.

Sonic Automotive made about half of what CarMax made in 2019. In 2014, the company opened 100 new standalone used-car stores (a segment where CarMax is the industry leader) in a bid to be more competitive with the latter. Five years later, CarMax seems unshaken and continues commanding a strong lead in the used car retail segment.

Asbury Automotive Group

Asbury Automotive Group was founded in 1995. Headquartered in Duluth, Georgia, the company sells new and used cars in 10 states across the US. It operates 88 dealerships and 107 franchises from where it sells and services about 31 vehicle brands from the US, Europe, and Asia. It is one of the largest American automobile retailers. The company also has 25 collision repair centers. In 2019, Asbury Automotive Group had 8,200 employees and a revenue turnover of $6.87 billion.

Asbury made more money from the sale of brand new vehicles in 2019 with 53.6% of the total revenue. Used vehicles only accounted for 29.5% of the revenue with financing and insurance bringing in 4.4%. For CarMax, used vehicles accounted for the largest portion of its revenue in 2019. But it still made more than thrice what Asbury made in 2019.

Carvana

Ben Huston, Ernest Garcia III, and Ryan Keeton founded Carvana in 2013 as a subsidiary company of DriveTime. It became an independent company in 2015. Carvana, headquartered in Tempe, Arizona, is an online retailer for used cars. It also offers financing options to buyers. Customers can choose to have the vehicles delivered to them or pick them from any of the company’s vending machines. It offers a 7-day return policy for unsatisfied buyers. As of 2019, Carvana had 3,879 employees and a revenue turnover of $3.94 billion.

Carvana, popular for its unique multi-story car vending machines, is still new in the industry. It only made its entry into the market seven years ago. Its revenue is over 6 times less than that of CarMa. In spite of this, Carvana is one of the fastest growing auto dealers in the United States in the used car sector. 

Lithia Motors

Headquartered in Medford, Oregon, Lithia Motors is an automotive retailer and dealership that runs over 180 stores in 18 states in the US. It was founded in 1946 by Walt DeBoer. The company operates six subsidiary companies, namely DCH Auto Group, Prestige Auto Stores, Day Auto Group, Downtown LA Auto Group, Carbone Auto Group, and Baierl Auto Group. Lithia Motors is the third-largest automotive dealer in the United States. As of 2019, the company had 14,320 employees and a revenue turnover of $12.67 billion.

Lithia Motors is one of the top 5 auto dealers looking to take a stab at the top spot in the industry. Its revenue has grown steadily in the past few years, seeing a 7.2% increase in the previous year from 2018. But with revenue just slightly over half of what CarMax made in 2019, Lithia Motors still has a lot of ground to cover.

Autotrader

Sanford Schwartz founded Autotrader in 1997. The company is headquartered in Atlanta, Georgia.  It acquires new, used, and pre-owned cars from private owners and dealers and sells them through its online platform. It also helps customers to understand financing and insurance options available by offering reviews, advice, and automotive comparison tools. Autotrader has 859 employees. In 2019, the company reported a revenue turnover of $1.1 billion. Autotrader is a subsidiary company of Cox Automotive.

Autotrader walks in the shadows of its parent company, Cox Automotive, which also operates other automotive businesses including  Kelley Blue Book, Xtime, and Manheim. Manheim is the largest wholesale auto auction company in the world. Compared to CarMax, Autotrader’s revenue is only a fraction of what CarMax earned in 2019. But while Autotrader is strictly an online marketplace for cars, CarMax operates both physical and online stores. 

Cars.com

Alex Vetter, Mitch Golub, and William Swislow established Cars.com in 1998. It is an American online automotive classifieds company headquartered in  Chicago, Illinois. It operates NewCars.com, PickupTrucks.com, Auto.com, DealerRater, and Dealer Inspire business divisions. It is one of the leading automotive classified websites in the US. Cars.com is also the parent company of DR Media Holdings. The company has 1,300 employees and reported a revenue turnover of $606.7 million in 2019.

Cars.com is an automotive classifieds website. It primarily works to connect car buyers to sellers and does not have ownership of the vehicles on sale. The company makes money from selling online subscription advertising products to car dealerships and automotive original equipment manufacturers. It is among the top American automotive classified websites. However, it cannot still measure up to CarMax in terms of market reach and revenue.

Conclusion

The top 10 CarMax competitors are: Copart, Penske Automotive Group, AutoNation, Inchcape, Sonic Automotive, Asbury Automotive Group, Carvana, Lithia Motors, Autotrader, and Cars.com. They have a total of 114,465 employees among them. Their combined revenue for 2019 was $94.62 billion.

Competitors Stats