“We have really just thought of what are all the ways we can put that customer at ease,” Lyski said.
The effort, which is being marketed as CarMax’s “Love Your Car Guarantee,” was borne from extensive research, Lyski said. That research found that 63 percent of shoppers said they needed more than seven days to feel confident they were making the right car purchase and that 96 percent of used-car shoppers said they would take advantage of a 24-hour test drive if offered.
The move sets CarMax apart from a burgeoning group of competitors in the used-vehicle business. Major online used-only rivals such as Carvana Co., Vroom Inc. and Shift Technologies Inc. have seven-day return policies. Franchised dealership groups trying to expand used-vehicle sales increasingly are offering return guarantees, too.
Lyski acknowledged that CarMax could see incremental expense increase if the 30-day guarantee leads to more cars being returned. But he added, “We don’t really believe it’s going to be significant.”
Though the formal 30-day return policy is new, CarMax already had been allowing returns past the previous seven-day period under some circumstances, Lyski said.
“We have a pretty good idea of what condition cars return in day one to day 30 already,” he said. “So we’ve used that to factor in on whether this is going to be able to be a sustainable, incremental expansion. We feel pretty good about that.”
Lyski declined to share the rate at which vehicles are returned but noted all return data is tracked.
“We know specifically why it was returned, what day it was returned on, whether it’s something we did wrong or whether it was something that wasn’t just a good fit for the consumer,” he said.
Asked whether he expected competitors to reassess their own return periods in light of CarMax’s move, Lyski said the retailer has been a trendsetter before, pointing to no-haggle pricing and buying consumers’ cars without requiring a purchase.
“I would expect it’s definitely going to put competitive pressure on the industry,” he said. “Whether they choose to respond immediately or over time or what, I don’t know. But we think it’s just further indication of us continuing to innovate here and leading this industry, and when you’re the leader, you’re always going to have some people that are going to follow.”
Brian Nagel, an analyst with Oppenheimer, said the move is in line with CarMax’s efforts to emphasize customer service for more than two decades.
“On paper, it may seem aggressive,” Nagel said. “But I think it’s just one more indication that [CarMax] is improving that customer experience.”
Moves like this are what CarMax has done “for its existence,” he said, adding that the company was one of the first auto retailers to embrace a large-scale certified pre-owned vehicle program.
Said Nagel: “So this 30-day guarantee is just one more piece of that.”
