CarMax met with optimism

In a time of rising gas prices, sinking property values and a push toward more fuel-efficient cars, CarMax is hedging its bets that things will improve, officials said.

“We know this is just a bump in the road,” said CarMax Regional Vice President Vaughn Sigmon.

Costa Mesa’s city and business leaders were on hand Thursday for CarMax’s latest venture — a more than 20,000-square-foot car lot at 3200 Harbor Blvd., just south of the 405 Freeway. The lot will hold between 300 and 400 used cars for sale and employ about 65 people, CarMax officials said. The store is the ninth CarMax in the Greater Los Angeles area.

“We’re always glad to have a new business in the city,” Mayor Pro Tem Allan Mansoor said. “This is certainly better than an empty property.”

CarMaxs generally bring in significant revenue to the cities they operate from, and Mansoor said any revenue the lot brings in this year would be a boon for the city.

Some, though, wonder what kind of success a business can have selling cars in this economy.

“One of the great things about this is we don’t suffer if CarMax makes a bad mistake,” said Richard McKenzie, an economics and public policy expert at UCI. “But it depends on oil prices in the future. If anyone only makes plans for five to 10 years down the road, they can miss out on all kinds of profitable opportunities now.”

Sigmon reassures that CarMax can change with customer demands.

“We’re not tied to any one car manufacturer. If people want smaller cars with better gas mileage, that’s where we’ll flex,” he said. The first car sold on the Costa Mesa lot was a Chevy Tahoe because prices are low on big cars, he added. “We rarely get stuck with cars we can’t sell.”

“The O.C. economy is much better than it is elsewhere. It might be a better bet today than a year ago. Construction costs are down, land prices are down, the profitability of opening a business could be better today than it was a year ago,” McKenzie said. “CarMax is starting to see the blue in the sky beyond the storm. They put their money where their mouth is.”

JOSEPH SERNA may be reached at (714) 966-4619 or at [email protected].