Used Cars Superstores Make Shopping Fun BUT Their Prices Can Be Beat
They’re called used-car superstores, and with their computer-assisted shopping, huge selection, spacious showrooms and no-haggle price policy, they are designed to eliminate everything that Americans have come to know and hate about buying a used car.
So far, there are only 10 of these soft-sell operations scattered around the country, but that number is expected to mushroom in coming years. CarMax, owned by the Circuit City Stores electronics chain, opened the nation’s first used-car superstore in Richmond three years ago; it now has five outlets and plans to build 75 to 85 new ones around the U.S. over the next five years. Republic Industries, headed by Blockbuster Video founder Wayne Huizenga, plans to open five AutoNation USA superstores by the end of this year–mostly in Texas and Florida–and get 12 more up and running next year. Republic is also acquiring Car Choice, which has two superstores in Dallas and Detroit that will be folded into the AutoNation chain.
To see whether the superstores really are super, we dispatched five MONEY staffers to go through the motions of buying a car at five CarMax and Car Choice superstores in Georgia, Michigan, North Carolina, Texas and Virginia. We then tried to find similar cars at traditional dealers located within a few miles of the superstores. Our findings: Shopping at superstores was far more pleasant and efficient, but dickering with a dealer always got us a better price, generally $100 to $300 less than the superstores’ for a similar car. Here are the details:
The shopping experience. The superstores are bright, clean and airy. Some have snack bars and supervised playrooms where kids can entertain themselves while mom and dad kick tires. You use a computer terminal to help find the cars you’re interested in. By touching the screen, you specify the make and model you want and the amount you’re willing to spend. The computer shows you all the cars that fit your requirements. It will also print out a sheet showing a picture of any car, a list of all its equipment, and the price–plus a map indicating where the car is located on the vast lot–usually 16 to 30 acres–adjacent to the showroom.
Conditions at the traditional dealers varied widely. But their used-car lots were generally crowded and badly organized. And sometimes the physical setting was rank. Correspondent Steve Marsh describes one particularly run-down Florida Ford lot: “The sales office is a mobile home on a muddy mound. Inside, you encounter a linoleum floor, crumpled paper wads and overturned coffee cups. The lot itself has cars crammed together, and it’s swarming with bugs.”
- The salespeople. The people we dealt with at the superstores were almost always attentive, polite and friendly. But, while they didn’t try any high-pressure sales tactics, many seemed brand new to the business and didn’t know much about cars. Meanwhile, the salesmen on the traditional lots ranged from helpful and knowledgeable to ill-informed and rude. Many tried to steer us toward models that cost more than we wanted to spend.
Here’s how fast the world of publicly traded car dealerships changes: United Auto Group was the largest in early January. But it didn’t take Republic Industries long to overtake it.
How many new cars does it take to make a used-car market? For years, anyone in China wanting a set of wheels pretty much had to go to a new-car dealer. Why? Because as recently as a decade ago, Chinese bought just 300,000 new cars annually. And without a lot of new cars, it’s hard to have many used ones.