CarMax to Enter Southland Market With Superstores

Southern California is poised to become a new battleground for two national giants of auto retailing, as Virginia-based CarMax unveiled plans Tuesday to jump into the region’s lucrative car market and spar head to head with rival AutoNation USA, which has been busy laying its own plans to dominate vehicle sales in the Southland through a string of automotive superstores.

CarMax, a subsidiary of Circuit City Stores Inc., said it intends to open as many as eight of its own superstores in Southern California next year, with the first to be in Carson, company spokesman Val Brown said. The move is part of a larger expansion plan to open up to 70 new- and used-car supermarkets nationwide over the next three years.

The company, which in its last fiscal year posted sales of $874.2 million, operates 19 outlets nationwide, all east of Dallas.

CarMax on Tuesday also said it had signed an agreement with Carson-based Nissan Motor Corp. USA to own and operate Nissan franchises. Under the deal, CarMax would sell new Nissans at any of its outlets nationwide, Brown said. The agreement mirrors a deal CarMax has with Chrysler Corp., which in the last two year has allowed CarMax to begin offering new Chrysler vehicles at two outlets in Georgia.

The deal will be tested at the proposed Carson outlet, which is slated to open in 1999 and will offer new Nissans alongside the chain’s usual fare of used cars and trucks, Brown said.

Both agreements are part of CarMax’s overall strategy to add more new cars and trucks to its used-car lineup, and Brown said the company hopes to strike sales arrangements with other auto makers, domestic and foreign, in the near future.

“We plan to add new-car franchises to our used-car superstore locations wherever possible,” Brown said.

Nissan spokeswoman Debra Sanchez Fair said company officials hope the agreement will help the Japanese auto maker turn the corner on sluggish domestic sales, which have fallen more than 14% since 1994.

“We evaluated [CarMax] on their customer performance as well as their business philosophy,” Sanchez Fair said. “A lot of the things they were articulating were in line with our own operating philosophy.”

The auto maker, in fact, plans to spend $17 million on a training program for Nissan dealers to teach them sales techniques similar to those CarMax claims it pioneered.

Launched in 1993, CarMax sought to take some of the sting out of shopping for a new car by offering a large selection of vehicles at fixed, no-haggle prices with salespeople coached to act more like consultants than pitchmen.

AutoNation has used a similar approach in building its own nationwide chain of 26 used-car superstores, including its first California outlet, which opened January in Irvine.

The company and its parent, Fort Lauderdale, Fla.-based Republic Industries Inc., also have their sights on the Southern California car market, snatching up existing dealerships in Valencia and Manhattan Beach and leasing sites for new AutoNation superstores in Oxnard and Long Beach.

Donald Keithley, a consultant who tracks the automotive industry, said the arrival of both superstore chains will cause other dealers to adapt their sales techniques to stay competitive. Keithley, for example, can envision other dealerships offering child care to mirror CarMax’s trademarked For Kids Only program to allow parents to browse unencumbered.

“The customer is going to be the big winner as this rivalry intensifies because all the players are going to offer customer-oriented kinds of services.”