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CarMax to build site here

Rochester Business Journal
December 23, 2011

Used-car giant CarMax Inc. plans to enter the New York market with the opening of a facility in Henrietta.
 
In July CarMax, which touts itself as the nation's largest retailer of used cars, acquired the 14-acre site that formerly housed Patrick Pontiac. A deed filed with the Monroe County Clerk's Office shows the property was sold to CarMax by John Holtz for some $5.12 million.
 
"CarMax is growing again, and we continue to look for areas in parts of the country that are not being served by an existing CarMax store," CarMax spokes-woman Elia Imler said.
 
The company expects to employ 50 to 100 people in Rochester. It has some 16,000 full- and part-time staffers nationwide.
 
CarMax operates 107 used-car superstores in 52 markets in 27 states, as well as five new-car franchises in some of those superstores. Within the Northeast, the company has facilities in Connecticut and Massachusetts.
 
"The property in Rochester was appealing to us because it's a regional location that can serve customers from surrounding areas," Imler said. "Additionally, it's near an auto row and other retailers, such as the local mall."
 
The town of Henrietta is awaiting updates to the company's original plans for the site, after which final approvals can be granted, Supervisor Michael Yudelson said.
 
"We're excited about it," he said of CarMax's decision to locate on Dealer Row.
 
The plans CarMax submitted call for a 34,000-square-foot building with a showroom and doll-up and mechanical work areas. There is also a small carwash for use on the cars the company sells.
 
The new facility could take two to three years to launch, CarMax's Imler noted, based on the amount of time it usually takes the company to open a new location.
 
"Having (CarMax) come to Rochester says something about the market here and it says something about Rochester," said Bradley McAreavy, president of the Rochester Automobile Dealers' Association Inc. "They view it as an area or an economic opportunity for them that's worth doing.
 
"The fact that they're choosing this city for that is a very positive thing, not only for the auto industry but for Rochester as well."
 
In addition to an increase in employment here, CarMax's arrival in Rochester will add sales tax revenue, McAreavy noted.
 
"One thing about the auto industry is they're big drivers of sales tax revenue, so we'll see a lift in that regard," he said.
 
McAreavy expects to see a facility of significant size on West Henrietta Road when CarMax opens and said the company will be a "very competitive operator in the used-car industry."
 
The publicly traded company is based in Richmond, Va., and was founded in 1991. In fiscal 2011 CarMax posted sales of $8.9 billion and net earnings of $380.9 million. Shares of its stock (NYSE: KMX) were trading midweek at $30.72.
 
The company's business model is one of a no-haggle buying experience with set prices on vehicles, service plans and financing. CarMax offers hundreds of vehicles at each of its facilities, as well as more than 30,000 used cars on its website.
 
"CarMax is a very well-organized machine which sells a lot of pre-owned cars," said CEO John Iannone of Auction Direct USA.
 
With six locations, Victor-based Auction Direct is a used-car auction reseller. The company employs some 300 people, including 70 locally, and sold more than 7,300 vehicles last year.
 
Iannone said the Upstate New York market could present challenges for CarMax.
 
"Profit margins are definitely shrinking for most retailers," he explained. "They have a tendency to play in the higher end of front-end margin. They may find it a little slow go."
 
Auction Direct competes with CarMax in Raleigh, N.C., and Jacksonville, Fla., Iannone noted, and he welcomes the competition in Rochester.
 
"It's a great company, and I'm sure that long term they'll provide customers with good options, and that's always good for everyone," he said. "When a national player comes into the market, it seems that most of the competition kind of focuses in on improving their operations as well. Usually everyone benefits."
 
Holtz agreed, adding that CarMax will generate a good deal of traffic for the dealers in Henrietta.
 
"I think it's a big plus for everybody in Henrietta, and I think every dealer is going to benefit as a result of them coming in," Holtz said.

12/23/11 (c) 2011 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.


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