CarMax to acquire Laurel Toyota Its aim is to expand new-car dealer holdings


July 22, 1998|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Further expanding its new-car retailing business, CarMax Auto Superstores Inc. said yesterday that it has agreed to acquire for an undisclosed sum the Toyota franchise rights owned by Laurel Automotive Group Inc.

Richmond, Va.-based CarMax said it plans to operate the franchise at its current location on Fort Meade Road in Laurel. The acquisition is subject to approval by Toyota Motor Sales U.S.A. Inc.

CarMax, a Circuit City Stores Inc. subsidiary that pioneered the used-car superstore concept, is in discussions with Toyota to establish a framework agreement to cover this acquisition and any in the future, said Val Brown, a CarMax spokesman.

CarMax operates 23 used-car superstores -- the one in Laurel is the largest -- and has been adding franchises since 1996 to boost sales, Brown said.

The company operates Chrysler Corp. franchises at two of its superstore locations in Georgia. CarMax also signed a deal in May to own and operate Nissan Motor Corp. franchises throughout the United States.

"Our core business continues to be used cars, but we feel that the combination of used cars and new cars will enhance sales incrementally," Brown said. The pending acquisition is part of a continuing program, he said.

Last month, Circuit City reported that its latest quarterly profit was flat amid widening losses at its CarMax used-car unit. CarMax posted a loss of $3.2 million, or 3 cents a share, compared with a loss of $1.2 million, or 1 cent a share, in the year-earlier period.

Circuit City, which owns 77 percent of CarMax, said the subsidiary might not be profitable for the year because sales of used cars are failing to meet expectations.

CarMax plans to open stores in White Marsh and in Sterling, Va., this year.

The company's shares closed yesterday at $9, up 43.75 cents.

Pub Date: 7/22/98

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