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Posted: 6:00 a.m. Thursday, June 26, 2014

Why Is CarMax Allegedly Selling Recalled Vehicles?

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By Clark Howard

ClarkHoward.com


CarMax is the dominant seller of used cars in the United States. But there's some ugliness involving our nation's vehicle recall epidemic that I need you to know about.

First off, I have always been a fan of Carmax. They've been around for 20 years and were started in Richmond, Virginia by the people who used to be with the late Circuit City.

CarMax began with a unique business model. They looked at what they knew people hated about buying cars and clean-sheeted the whole process. Ideas like "the price is the price" and "no high pressure sales" were among their key tenets. Using those guidelines, they built a clean and simple way to buy a car. (See my tips for buying a used car.)

Today CarMax has more than 120 locations and leads the field in used car sales. But it's emerged that they are allegedly selling an unknown number of recalled cars without fixing them.

When you go to buy a car at Carmax, they talk about the quality of their cars—the 125+ point inspection and how only 1 in 3 cars are good enough to be one of theirs.

Yet there is a blind spot here. Now a coalition of consumer groups is petitioning to have the FTC investigate CarMax.

Here's why CarMax is allegedly selling recall vehicles

So what's going on? Well, here's the story. Car dealers hate CarMax with a passion because they came into a cozy industry and upset the apple cart with a new business model.

That business model includes holding cars on CarMax lots for no longer than 3 weeks. So let's say a vehicle has a recall on it. CarMax has to go to a new car dealer for the recall work; the dealers won't allow CarMax to do the repairs themselves.

So if I'm the new car dealer and my archenemy CarMax brought me that car, I'm going to get right around to fixing it. Not! You can see how CarMax is between a rock and a hard place…  

More than 30 million vehicles have already been recalled this year. A lot of them end up on CarMax lots. But according to the petition, they are not fixing them and not alerting the buyers.

It all comes down to a question of credibility. If this is true, maybe CarMax needs to take those vehicles out of stock, or put a full disclosure out there to buyers. But to pretend you're selling safe cars and then for buyers to find out that they've bought a recalled vehicle? That is absolutely not OK.

CarMax has built up a good reputation over 21 years. I would say to them this: Don't blow it now by taking advantage of your customers.

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