Please ensure Javascript is enabled for purposes of website accessibility

CarMax Improves Online Capabilities With No-brainer Acquisition

By Daniel Miller - Apr 1, 2021 at 3:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In a move to advance its online capabilities, CarMax agrees to acquire all of Edmunds.

CarMax (KMX 0.44%), the nation's largest retailer of used vehicles, had a big Thursday when it announced its fourth-quarter fiscal 2021 and an agreement to acquire all of Edmunds in a $404 million deal. The deal, combined with CarMax's previous $50 million minority stake in Edmunds, is expected to close in June. The latter will continue to operate independently once the transaction closes. A partnership between the two companies has existed since January 2020 when CarMax made its initial investment in Edmunds, and the two developed an online instant offer for sellers of used vehicles in addition to other innovative projects. After acquiring all of Edmunds, management believes it will accelerate their ability to enhance the online consumer's digital experience.

Rows of vehicles at a dealership lot.

Image source: Getty Images.

"We are excited to bring the iconic Edmunds brand, history of innovation, and exceptional technology and creative talent into the CarMax family," said Bill Nash, CarMax's president and CEO, in a press release. "The instant offer products on Edmunds.com and CarMax.com have put CarMax in the position to become the largest online buyer of used autos from consumers," Nash continued.

This acquisition is certainly not an April Fool's joke as the used car retailer has long touted its goal of giving consumers the ability to decide when, where, and how they wish to purchase their vehicle. Over the past year, COVID-19 disruptions have pushed retailers to focus online. In fact, CarMax noted in its Q4 results that three-quarters of its consumers advanced their transaction digitally. Acquiring Edmunds to improve consumers' ability to research vehicles will only improve CarMax's omnichannel presence.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CarMax Inc. Stock Quote
CarMax Inc.
KMX
$91.66 (0.44%) $0.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.