Carbiz goes toe to toe with CarMax

on Apr23

“The inspiration to change the facility and the way customers interact started with wanting to incorporate an online e-commerce model with our current model.”
Evan Berney, Carbiz CEO

Some dealers shudder when they hear used-car giant CarMax Inc. is opening a store down the road. Not Evan Berney.

The CEO of used-car store Carbiz is about to open a second store in Laurel, Md., about 20 miles from Washington. Berney deliberately chose a site next to a CarMax outlet.

“My entire intentions were to get as close to CarMax as possible,” said Berney, who owns a used-car store in Baltimore that opened in 2003.

Carbiz is “apples to apples” with CarMax, Berney said.

“When a customer is considering us over somebody that is similar, we believe we add more value in a better pricing model, better warranty [and] better customer service in a better environment,” he said. “We know we can win those customers over.”

For now, Carbiz will price its vehicles below comparable vehicles at CarMax. But Berney plans to have five stores in the mid-Atlantic region in five years. After he has added three stores, he said, Carbiz will be able to match CarMax’s prices.

CarMax has stronger brand recognition than Carbiz, Berney admitted, but by the time Carbiz has five stores in the region, “we will have just as much of a household name as CarMax,” he said.

Carbiz ships vehicles for free within 100 miles of its store. As the business expands, so will the free shipping areas.

Berney co-owns the stores with his father, Jeff Berney. His sister, Jessica Iliev, is CFO, and his wife, Ali Berney, is the chief innovation officer.

Berney, 34, plans to open the Laurel store July 1. The building Carbiz has leased is 35,000 square feet, reminiscent of a big-box retailer such as a Best Buy or Wal-Mart, he said. Before he leased it, it was a field house full of basketball courts.

Carbiz relaunched its Baltimore store, above, with a Silicon Valley vibe in August. The retailer is about to open its second store in Laurel, Md., next to a CarMax outlet.

The original store, in Baltimore, received $500,000 of remodeling to be more customer-centric and align with the company’s digital presence. 

“The inspiration to change the facility and the way customers interact started with wanting to incorporate an online e-commerce model with our current model,” Berney said. 

The store’s website resembles that of a tech company, not a dealership. Carbiz recently launched a new version of the website that includes online checkout. Berney wanted customers to think of Carbiz as a tech-based car buying platform, so, he says, they gave everything a face-lift. 

Berney began incorporating a one-person, one-price business model and designed his showroom for a Silicon Valley-style experience. 

The showroom has open meeting booths, foosball tables and arcade games. 

“It all comes down to aligning all of the personalities of everything that we do,” he said. The “website needs to fit the showroom, which needs to fit the customer experience.”

Carbiz’s Baltimore showroom features table tennis and foosball, as well as TVs and arcade games.

Carbiz has taken a hybrid approach in the store, having sales consultants also handle much of the finance and insurance process. 

The sales department is broken into teams. Team members’ pay is 70 percent salary, plus 30 percent based on their individual volume, team average volume and back-end profitability on their deals. 

Sales staffers, called experience specialists, go through the F&I product menu with customers, and the desk managers handle the financing behind the scenes. 

No Carbiz employees have automotive experience on their resumes. Some worked in marketing, general retail or the restaurant industry. “We don’t target seasoned automotive employees” because they have learned too many bad habits and are difficult to retrain, Berney said. 

Because Carbiz stopped hiring F&I managers, “we were able to allocate those dollars elsewhere,” Berney said. 

Carbiz hired more team leaders and staff in the business development center to handle online transactions. 

Carbiz officially relaunched the Baltimore store with the Silicon Valley vibe in August, Berney said. The store sells about 150 cars per month, and F&I profit per vehicle retailed increased about 5 percent in the last five months of 2016, after the relaunch, he said.

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