RICHMOND, Va. -- CarMax, Inc. the nation's largest retailer of used cars, reports that searches on carmax.com
for smaller, more fuel-efficient vehicles increased in June. According to
carmax.com, search frequency rankings for several vehicles with higher
estimated miles per gallon (mpg) have increased.

    — The Mazda3, with an estimated 24/32* mpg, leaped from 39th in March
to 16th in June.

    — The Toyota Corolla, with an estimated 28/37* mpg, jumped from 9th to
4th place over the same time period.

    — Outside the top 20, the Volkswagen Beetle, with an estimated 21/28*
mpg made a big leap from 71st place to 40th since March.

    “With gas prices continuing to rise, fuel efficiency has increased in
importance for many shoppers,” said Ann Yauger, director of carmax.com. “On
carmax.com, we offer a robust research section that allows consumers to
find the best car for their needs.”

    Of the three makes and models highlighted, there are a combined total
of nearly 1,000 of them, as of this release, available on carmax.com for
sale and can be transferred to the nearest CarMax store.

    The CarMax website can be used to research information on vehicles of
various makes and models. Online shoppers can search the company’s
inventory of more than 25,000 new and used cars. The website showcases
vehicles with multiple photos, the no-haggle price, and information on
features, options, fuel economy and customer reviews. Visits to carmax.com
continue to increase, and approximately 70 percent of in-store customers
visit the website before coming to the store.

Tate Attia, finance manager at Easterns Hyundai of Leesburg, has heard and seen the recent trend of people trading in their SUVs for more economical cars — but he can also speak from personal experience.

“I live 40 miles from work, and every three days I was spending $75 on gas, so I traded in my SUV for a smaller car,” Attia said. “I now pay $50 once a week [on gas].”

Attia took a hit of $7,000 trading in his SUV for his new four-door sedan – but to him, it was worth it.

“No dealer wants to buy a SUV,” he said, speaking from his dealership position. “We have removed all profit on used SUVs because we don’t even want them on the lot. We are lucky if we can give them away at invoice [pricing].”

The selling of hybrid vehicles is a different story.

When Easterns Hyundai gets any hybrid cars in stock, buyers at Easterns’ 16 showrooms in the metropolitan area are ready to pounce.

“We get hybrids rarely,” said Attia, “but when we do get some in, it turns into a bidding war.”

Cars still moving

Over at CarMax Auto Superstore headquarters in Richmond, revenues for the first quarter of 2008 have risen, but the company has seen declines in both customer foot traffic and buyers’ ability to get the credit to purchase a vehicle.

“The slowdown in the economy, the dramatic rise in gasoline and food costs, and the related impact on consumer spending adversely affected our first-quarter performance,” said Tom Folliard, CarMax president and chief executive officer. “For the first time in more than two years, we experienced a modest decline in customer traffic in our stores. Additionally, credit availability from our third-party nonprime lenders declined slightly during the quarter.”

Folliard added, “Despite the slower-than-expected sales, our data indicates that we continued to gain market share in the late-model used vehicle market.”

The declining market for the once-popular SUVs has had an impact on CarMax’s business.

According to the company’s first quarter earnings report, “wholesale industry prices for SUVs and trucks declined nearly 25 percent, which is approximately four times the normal depreciation expected over this period and well in excess of the depreciation expected over a full year.”

As of June 30, CarMax had 1,375 SUVs available, both new and used, ranging from $7,998 to $70,296.

Folliard said, “This is the most rapid depreciation of any vehicle segment that we have experienced in our 15 years.”

The earnings report also stated that if the current trends persist, “results for the full year [of the company's earnings] could be significantly below the bottom of our original earnings guidance range.”

CarMax had only two hybrid cars available June 30 – a 2006 Lexus RX 400h for $35,998 (31K) and a new 2008 Toyota Highlander for $36,816.

Great deals on SUVs

“With SUVs, [a buyer] can get a good enough deal that outweighs the $1 more in gas,” said Eric Kaiser, sales manager at Moore Cadillac Hummer.

He said the big sport utility vehicles have dropped in price significantly.

Kaiser said last week was a busy week for the dealership because of the deals the store has going on – 0 percent interest for 72 months vs. the typical 6.9 percent interest.

“This deal saves a buyer $15,832 over the life of the loan,” he explained.

Having Cadillac as part of the dealership has helped the store during these hard economic times, Kaiser said.

“We are able to maintain the same client customer base, but we are nowhere near where sales used to be,” he said.

Contact the reporter at lwolstenholme@timespapers.com