Kim Souza with our content partner, The City Wire, explores the steady growth of Bentonville-based America's Car-Mart.
The publicly-traded “buy here, pay here” used car company has been on track to add about 10 new stores annually. While a lot of the firm's growth is organic, there is a formula that Car-Mart is following.
From Souza's article:
There’s nothing sexy about selling dependable cars to hardworking people in small- to medium-size towns across the South. But one Bentonville-based company is raking in record profits by doing just that.
CEO Hank Henderson said the company uses a grassfire approach to expansion, moving 30 miles or so down the road to the next town as it seeks out new growth opportunities. The company began fiscal 2013 on May 1 and has already had two new dealership openings.
“We will add 10 new sites this year fiscal year looking more closely at expanding into Georgia, one of our newer markets,” Henderson said.
Industry analyst Daniel Frutado said Car-Mart is “a stalwart in the industry posting consistent 13% annual revenue growth over the past three years with bottom line earnings per share up 31%.”
CFO Jeff Williams said future growth will come from two sources: leveraging the relationships the company ha
s with its 54,000 customers, and through organic new store openings.
“We have 28 stores that are less than five years old and 28 stores between five and 10 years old, all of these are still ripe for expansion as they grow their customer base. We work hard to serve our customers from day one to final payment and that continues to pay off in a big way,” Williams said.
The company boasts one-third of its annual sales are from repeat customers and in veteran stores in Arkansas that rate is as high as 50%. One competitive advantage Car-Mart has over its competitors — mostly mom and pop owned lots — is its army of purchasing agents.
“We have 45 purchasing agents who drive and thoroughly inspect every vehicle they buy. They are shopping every day, where as a small dealer might only have one or two days a week to look for inventory,” Henderson said.
As new car sales continue to improve, Henderson said those trade-ins to dealers are more prevalent today and help ease the tight used car inventory.
Read more here about America's Car-Mart business model and what's around the next curve for the used car chain.