CarMax Offer LOL

Decided to see what CarMax would offer for a 2023 OPR with KDSS and 4800 miles…$44k

Had near identical one on the lot for $53k. At least I got to scope the lot for fun!

 

So now you know that another dealer will offer significantly less than that amount.

 

2021/2022 Carmax/Carvana/Vroom...those were the days. In 2022 I got offered $5k+ more than I bought mine new for in 2019.

 

Yep, I’m glad I got mine when I did in 18’. Same truck/trim today would cost over 10k more.

 

Just looked at a new 2023 sitting at the dealer a few days ago and my thought exactly, I would have paid over $10,000 more for the same vehicle.

 

I found this interesting video about CarMax:

 

Carmax is in the business of making money.

 

Exactly.

 

100% reasonable.

 

Carmax is pretty good to offload cars you don't want/need anymore or to use as a good baseline for trade in.

I've sold 2 cars to Carmax, one being a lease that we made money on, used their offer as leverage on a trade in value for my mom's car and I'm about to do that same thing again for my dad's new Tacoma. They've offered more than carvana or vroom

 

Making money is the best kind of business to be in.

 

At the end of the day, our 4Runners are depreciating assets, they just do it slower than most. The used vehicle price bubble is coming to an end.

 

I took an Audi A4 into CarMax one time to see what they would offer me. They tried to tell me my car had a bad turbo and offered me $5k for a car that was worth about $11.5k to $13k. I ended up selling it a few months later for $12.5. I asked the guy why he thought the turbo was bad and he couldn't give me an answer other than it didn't feel right.

 

I would argue it's the only kind of business to be in

 

Even non-profits make a profit for someone.

The doctors at a local non-profit clinic may not drive Ferraris, but they also don’t wear sackcloth and eat locusts.

 

Just because you sold it for $12.5 doesn’t mean the turbo wasn’t at issue…it just means that you and CarMax disagreed, and you found a buyer who agreed with you.

Hopefully you both were right and CarMax was wrong. But then again, if the guy there has doubts, it’s his job to act upon them.

The opportunity cost was what…maybe $3k? In other words, they could have made $3k off of you, but didn’t. Meanwhile, they perceived a potential risk of being off on the market value by $6.5k - heck, let’s make it $6k for ease of math.

If we were to make a bet where you make $3k if you win, but I make $6k if I win - you probably want to be really sure about it.

 

I think it's funny how fast the general mood went from "we can't get vehicles fast enough" to "they won't be able to sell the vehicles they're making". IMO, an important factor that hasn't been mentioned is being at the tail end of the year. Considering how much people talk about resale value, it's worth considering the relative resale value of a '23 vs a '24 with the same mileage. I keep 'em until they're ready for auto heaven (or hell), so that's really not a consideration for me.

 

That's what I love to hear. Drive it until the wheels fall off!

 

I've done that twice. Actually, in both cases I got the wheels back on and kept them each alive for a couple more years.

 

Part of the issue is how much leverage is being used. People are financing everything, and interest rates combined with people being payment buyers is going to cause real volatility issues.

 

This is the truth

 

The turbo was not an issue. I kept the car for another six months before I sold it. The very next day I took it to my mechanic to make sure. The guy who took my car for a drive was the only one making the decision. I talked with him as soon as he pulled back up to the lot. I asked him how he could tell the turbo was bad and he told me "It just didn't feel right". My friend I sold the car to, who knew what the guy said, never had any problems with the car and he had it for the next five years. By your logic, I would have been out quite a few dollars if I had listened to him.

 

Right, but my point is that the guy at CarMax has to make a decision - and if he incorrectly believes something is wrong with the car, then he's better off walking you elsewhere.

Now, in theory, he could have had one of the people in the maintenance shop on site there take a look at it. But he obviously didn't. Let's pretend that nobody was available, giving him the benefit of the doubt...although perhaps he's just full of himself.

He actually made the right decision even though he made the wrong decision. Let me explain using some round numbers.

If we assume that a bad turbo means they lose $6k, and a perfect car means they make $3k, then it's easy math.

A 100% chance of a bad turbo (not likely, as we know) = (100% * -$6k) + (0% * $3k) = -$6k
50% chance of a bad turbo: (50% * -$6k) + (50% * $3k) = -$1.5k
25% chance of a bad turbo: (25% * -$6k) + (75% * $3k) = $750

The breakeven is the 1/3 mark. As long as he feels he more than a 1 in 3 chance of being correct on his hunch, he should walk you.

Now, YOUR decision making was correct even though it was...well, also correct. So you were mathematically correct and factually correct. That's a great combo, and it resulted in you being financially correct.

 

@bassist - Or just maybe he thought I didn't know anything about my car and would except his opinion when all he did was drive it for five minutes?

"He actually made the right decision even though he made the wrong decision. Let me explain using some round numbers." Did he...If he had given me a fair price and not lied or tried to scam me, I might have sold it to him and we both could have made some money. He/CarMax got nothing. I have nothing against CarMax, just giving my one-time example of going there.

 

He had nothing to gain by “scamming” you - unlike a traditional dealer. Confusing incompetence for malice doesn’t really get you anywhere.

CarMax bids are binding across their system and they know that you will bring the bid to another dealer in all likelihood.

I think you’re not differentiating between making the right decision and being wrong - both can exist at the same time.

If you believe a plane is going to crash, you shouldn’t get on it. Statistically, I can tell you that you are most likely going to be wrong, and the plane’s arrival will prove you wrong, but if your evaluation of the probability of the crash is high enough then you absolutely would make the right decision by staying home.

The money he missed out on making for CarMax was not valued equally to the money he could lose for CarMax based upon his read of the situation. Obviously he was either risk neutral and overly confident in his views or risk averse.