Richmond’s CarMax Inc. (NYSE: KMX) has turned to an Israeli company to help create more transparency in online auction purchases.
UVeye Inc. makes high-resolution images of vehicles. The technology is generally used at dealerships when a vehicle comes in for service, but CarMax is exploring other areas to utilize the technology. During its fiscal year that ended Feb. 28, 2022, CarMax sold approximately 924,000 used vehicles and 706,000 wholesale vehicles at its auctions, according to its most recent earnings report.
Ted Cox, senior manager of merchandising at CarMax, said historically the process has taken place in person. CarMax has auction centers across the country, and dealers gather and bid on vehicles. Cox said the company was testing online auctions before the pandemic, but Covid-19 forced the company to push into the online auctions. Now, most auction sales are conducted virtually.
Cox said the company’s goal is to create a better online experience, and the high-resolution images from UVeye give buyers more information about the vehicles. The images can reveal dents, scratch and the condition of the undercarriage. The photos are provided to the auction buyers on top of an inspection report.
“With the technology, you get a more accurate feed and more transparency,” Cox said.
CarMax connected with UVeye a few years ago at the Consumer Electronics SHow, the annual high-tech trade show in Las Vegas. CarMax officials were impressed with UVeye’s technology and saw various ways that the products could be used. In 2021, CarMax made an investment in UVeye during a $60 million funding round. Besides CarMax, W.R. Berkley Corporation, F.I.T Ventures and a group of Israeli institutional investors were involved in the round.
CarMax has never publicly revealed the size of the investment.
“We were a strategic investor in that round,” said Anuj Kapur, director of business development at CarMax. “From there forward, we began exploring different ways that we could work together, and the first way that we dug into was in our auctions business.”
Kapur said it made sense to form a partnership with UVeye. CarMax is still testing and iterating online automotive sales and the high-resolution images are a way to improve the online buying experience.
“There was strong cultural alignment [with UVeye], which is important for any investment that we make,” Kapur said.
CarMax launched the technology at six auction sites across the country recently and plans to install them at all the company’s other auction centers soon. The company would not speculate if the technology will eventually be used for retail sales. Right now, it is focused on talking with dealerships in its network and understanding the benefits of the high-resolution images in auction sales.
“We are not sharing beyond this announcement around auctions,” Kapur said. “We are not sharing any of our future plans for UVeye. … [But] it will evolve over time.”
Before the technology was installed, a CarMax vehicle inspector would take images with a handheld camera. UVeye’s cameras can take pictures in areas that are hard to reach for inspectors and add more information for an online auction.
Auction buyers conduct most transactions online. Some people who purchase vehicles at a CarMax auction are located hundreds of miles away, thus creating logistical challenges. That means CarMax must provide the best information to the buyers.
“When you receive the car off the truck, you want to see in person what you believed it was when you looked at it online,” Kapur said.
For the three months ending Nov. 30, CarMax posted $6.51 billion in revenue and $37.58 million in net income. Its share price, at around $75.73 in early Wednesday afternoon trading, is down 30.53% across the last 12 months, but is up nearly 25% from the start of the 2023.
