After 27 years, America’s largest used-vehicle retailer, CarMax, recently announced it’s exiting the new-vehicle retail business. The Fortune 500 company is dumping its last two franchised dealerships, both Toyota, to specialize in used-car sales. The news comes after the auto retailer touted its new 24-hour test drives.

Why did CarMax pivot after a quarter-century of selling new vehicles? What will the future hold? There’s a lot to unpack here.

CarMax will revert to its used-car roots

In January, CarMax sold Laurel Toyota in Maryland to Sheehy Auto Stores of Virginia. The company told Automotive News it expects to wrap up the remaining Toyota dealership sale in Kenosha, Wisconsin, this year.

CarMax will retain its Kenosha location for selling used vehicles. The Toyota facility’s prospective buyer would operate out of a proposed new dealership.

It wasn’t a quick decision. Over time, CarMax has seen the new-vehicle sales decline. The coronavirus pandemic that began in 2020 only further stifled new-car sales. It also revealed the company’s need to consider online sales. 

The auto retailer now plans to concentrate on its used-vehicle business and implementing a digital platform for online car sales.

CarMax rolled out its new omnichannel retail platform at the end of 2020. It has also launched a marketing campaign to get the word out that consumers can buy used vehicles at CarMax online. The new technology allows customers to seamlessly shop in physical CarMax stores or online for an easy and enhanced buying experience.

The pandemic has forced auto retailers to facilitate remote and online sales to stay competitive. 

CarMax will specialize in used cars

The pandemic has also boosted used-car sales. And that works out for CarMax because it has been consistently selling pre-owned vehicles. It makes sense that it would become the company’s focus.

In a statement to Automotive News, CarMax’s senior vice president of store operations, Darren Newberry, explained that the new platform would allow the company to serve its core customers on their terms. Whether they want to buy or sell, consumers can do so at home, at stores, or in a hassle-free combination of the two.

Though CarMax had sold new vehicles since the mid-’90s, by 2003, the company was beginning to sell off those venues. Others connected to used-car supercenters were moved to independent locations. By 2006, CarMax had only six franchised stores remaining. 

The CEO at the time, Austin Login, said they stayed in the new-vehicle game to “keep an exposure” and maintain relationships with companies that sold new cars.

In 2016, CarMax had four new-vehicle franchises but sold two of them that year. As of December 2020, CarMax had 220 used-vehicle locations in the United States aside from the two Toyota franchises.

But what about the 24-hour test drives?

Most dealerships allow you to test drive a vehicle you’re considering. There’s just enough gas in the car for you to go a few blocks. But how much does a quick drive tell you about a vehicle and its ability to meet your needs?

Recently, CarMax announced a new policy. With its “love your car” guarantee, you get a 24-hour test drive and a 30-day return policy on all cars.

But despite the company’s exit from new-vehicle sales, its 24-hour test drive still stands. The policy seems better-suited to used vehicles anyway.