Circuit City Stores Inc. is shifting its CarMax used-car lots into high gear as it rolls out the concept nationally. Until now, Richmond-based Circuit City has characterized CarMax: The Auto Superstore as simply a test.
But the company has now confirmed the viability of CarMax as a profitable growth vehicle for the next century, and this may cause some car dealers concern over the prospect of the competition.
The chain said it will begin the national expansion of CarMax this year by opening lots in Charlotte, N.C., and in Tampa and Orlando, Fl. It also is targeting additional markets for CarMax lots in 1997 and 1998. Those markets include South Florida; Dallas-Fort Worth; Houston; and Washington-Baltimore.
"Their announcement clearly shows how successful the concept is," said Richard Strauss, chairman and chief executive officer of Dick Strauss Ford-Isuzu-Suzuki Inc. in Chesterfield County and a past president of the National Automobile Dealers Association.
"I never doubted that they would go forward with this project," Strauss said. "They had very deep pockets, they were committed from the very beginning with the very top people, and they were on the cutting edge."
Circuit City spokeswoman Ann M. Collier said the company always anticipated rolling CarMax out nationally if the initial tests were positive. "Our decision to expand it reflects the wide consumer acceptance of our concept," Collier said.
H. Wayne Huizenga, the entrepreneur who built Blockbuster Video, announced last month that he and a group of investors plan to open as many as 25 AutoNation used-car lots. A former Blockbuster franchise owner, who now is a shopping center developer, is planning two CarChoice megastores: one in a Detroit suburb and the other in the Dallas area.
"Circuit City is going nationwide in an attempt to keep other would-be players out of the market," said Dr. George E. Hoffer, a Virginia Commonwealth University professor who specializes in the auto industry. "This is a very good move for them."
While the current overall concept is "Used Car" based, some new vehicles were apparently being sold in the CarMax test, and if continued, would be even more of a threat to regional Auto dealers.
One thing is sure, however, consumers will continue to need to have their cars repaired, and pay for those repairs by check. Regardless of whether this is a traditional Dealer location or a new "Super Store," there will continue to be a need for down payment Check Guarantee.
Keep your eye on this new idea, and watch for the sales opportunities.
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