2 Forward-Looking Statement This presentation contains forward-looking statements, which are subject to risks and uncertainties. Additional discussion of factors that could cause actual results to differ materially from management’s projections, forecasts, estimates and expectations is contained in the CarMax, Inc. SEC filings.

3 CarMax Today Used Car Superstores Sacramento Richmond Raleigh Atlanta Nashville Orlando Tampa Miami / Ft. Lauderdale San Antonio Dallas/Fort Worth Houston Los Angeles Baltimore / DC Chicago Charlotte Greensboro Mid-sized Markets (13) Large Markets (8) 1 Greenville Knoxville 1  Nation’s leading used car specialist  Pioneered used car superstore –1993  Operates 44 used car superstores  FY03: ­ Sales: $ 4Bn ­ Net profit: $ 95mm ­ Separation Costs: $ 8mm ­ Earnings ex Sep.: $103mm 1 Las Vegas 1 1 Kansas City 1 Birmingham

4  Unique retail opportunity  Provides superior economic returns What Is CarMax?

5 CarMax Sells More Cars  CARMAX 5,210  Public dealers 2,023  Average dealer (NADA) 1,376 Sales/Store (Units) 2002

6 CarMax Gains Market Share  CARMAX + 8%  Public dealers - 8% Used Car Comp Unit Sales 2002

ROIC (%) (2) (1) After-tax EBITR/Average invested capital. Invested capital includes operating leases capitalized at 8x. (2) Auto dealer average includes: ABG, AN, GPI, LAD, SAH and UAG. Source: CarMax calculations based on companies’ public filings, most recent fiscal year. ROIC CarMax Earns Higher Returns (1)

8 Why Does CarMax Work?  Used car focus  Consumer-preferred concept  Process-driven competitive advantages  Organic growth plan

9 Used Car Focus  CARMAX 91%  Public new car companies 38%  Average new car dealers (NADA) 48% Used Car Mix % (Units)

10 Why Used Cars?  Huge, fragmented business  Non-commodity  Stable

11 Used Vehicle Sales Stable Source: Manheim Auctions

12 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Proprietary Operating Process

13 Marketing CARMAX MARKETING COMPETITIVE ADVANTAGES

14 CarMax Marketing Competitive Advantages I. What we offer Marketing II. How we offer it

15 I. The CarMax Offer - Overview Marketing

16 1. Low, No Haggle Prices I. The CarMax Offer  No haggle on price - on trade-in - on financing - on extended service plan  Competitive Prices ($500 - $1,000 Below KBB)

17 2. Great Selection  10x typical dealer  All makes and models on one lot - tailored to local area  15,000+ cars available for transfer I. The CarMax Offer

18 3. Great Quality  No flood/frame damage  125+ point inspections and reconditioning  5 day money back guarantee  30 day worry free warranty  Extended warranties I. The CarMax Offer

19 Matching Consumer Needs I. The CarMax Offer

20 Superior to Competition I. The CarMax Offer

21 CarMax Marketing Competitive Advantages I. What We offer Marketing II. How We Offer It - Internet Competitive Advantages - Newspaper Competitive Advantages - Television Competitive Advantages

22 CarMax Primary Competition II. How We Offer It

23 Internet Competitive Advantages  National scale: selection II. How We Offer It  Site optimization Consumer Preferred

24 National Scale: Selection  Single national brand II. Internet Competitive Advantages  15,000+ cars  Transferable anywhere - Over 4,500 SUV’s - Over 2,300 vehicles under $10K - Over 525 Jeep Grand Cherokees

25 Ease of Use II. Internet Competitive Advantage

26 Consumer Preferred  Number 1 car site in every market  84% say site is excellent/very good  90% say better than other dealers  Second most mentioned car site nationwide! (J.D. Power) II. Internet Competitive Advantage

27 Newspaper Competitive Advantages  Scale: lower costs II. How We Offer It  Ad optimization Consumer Preferred

28 Scale: Lower Costs  Purchasing advantage vs. 90% of dealers  Consistent ad (3,000 ads - 4 designers) II. Newspaper Competitive Advantages

29 Optimized for Used Car Shopper II. Newspaper Competitive Advantages Price Quality Selection

30 Consumer Preferred II. Newspaper Competitive Advantage  Non-CarMax markets  190+ competitor ads

31 Television Competitive Advantages  Scale: lower costs II. How We Offer It  Ad optimization Consumer Preferred

32 Scale: Lower Costs  Buying scale vs. most ( %) II. Television Competitive Advantages  Ad production economies (20 ads vs. 0-4 ads)

33 Ad Optimization  consumers test every ad II. Television Competitive Advantage  2-4 cities  Moment to moment reaction

34 Consumer Preferred II. Television Competitive Advantage

35 Impact of Marketing Scale II. How We Offer It

36 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Proprietary Operating Process

37 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Proprietary Operating Process

38 Proprietary Operating Process Competitive Advantage  Consistent processes across stores  Scalable  Hard to replicate – time – re-applied learning

39 Proprietary Operating Process Why Others Failed  Operating processes weak  Only copied the sales end  Did not fully adopt equities  Focused on the visible consumer offer

40 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Consumer Offer

41 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Purchasing / Inventory Management

42 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Reconditioning

43 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Consumer Offer

44 Purchasing/ Inventory Management Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Information Systems

45 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Finance Originations

46 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Purchasing / Inventory Management

47 Purchasing/ Inventory Management Efficient Inventory Management  1 million served  4 million appraisals  All transactions captured and analyzed  Right car, right place, right price and right time

48 Purchasing/ Inventory Management People Development  Volume buying = great buyers  130 buyers with over 10,000 appraisals  Report card = accountability and improvement  Difficult to replicate

49 Purchasing/ Inventory Management Proprietary Pricing Model  Sophisticated model  Refined over 10 years  Store specific  Automated and flexible

50 Purchasing/ Inventory Management We Buy Cars  Cash offer on every car  We will buy your car even if you don’t buy from us  1/2 of our vehicles are sourced through appraisals

51

52

53

54

55

56

57 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Purchasing / Inventory Management

58 Auctions: Disposing of Vehicles We Buy Cars  The majority of appraisal buys don’t make the cut  125,000 cars/$420 million in sales  $3,400 cost, 10 years old, over 100,000 miles

59 Auctions: Disposing of Vehicles Traditional Disposal Options  Wholesale individually  Take to off-site auction – Excessive fees – 60% sales rate – 1:6 dealer/car ratio  Minimal control, high cost

60 Auctions: Disposing of Vehicles Carmax Auctions  Economic and efficient – No fees – 98% sales rate – 1:2 dealer to car ratio  Real-time market feedback  Total control

61 1 Auctions: Disposing of Vehicles

62 Auctions: Disposing of Vehicles Auction Summary  500,000 vehicles sold  Integrated operating system  Customer profiles  Industry-leading attendance and results

64 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Reconditioning

65 Service Operations  Reconditioning and retail service  Reconditioning is majority of work

66 Service Operations Competitive Advantages 1. Reconditioning treated as manufacturing 2. Centralized production planning 3. People development

67 Service Operations 1. Reconditioning = Mfg.  Engineered process  Operating procedures on-line  Proprietary custom system – ERO  Maximize facility utilization

68 Service Operations 2. Centralized Production Planning  Sophisticated weekly planning algorithm  Balances capacity across all stores  Minimizes inventories

69 Service Operations 3. People Development  Structured training program  Technicians

70

71

72

73 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Consumer Offer

74 Business Office Complex Transactions  An average transaction  How traditional dealers do it

75 Business Office Why That Won’t Work For Us  Volume  Across states  Store growth

76 Business Office 10 Years Of Process Development  Over 4 million transactions  900 forms, 14,000 fees & taxes  Integrated systems designed around process

77 Business Office Competitive Advantage  44 stores, 1 system  Seamless transactions across stores  Easily leverage workforce for growth

78 1 Business Office

79 1 Business Office

80 1 Business Office

81 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Consumer Offer

82 Sales Floor Sales Force  Over 2000 sales consultants  Flat commissions benefit customer  Structured advancement program

83 Sales Floor Simplified Process  Online financing  Step by step delivery  Consistent and easy to learn

84 Sales Floor Performance Management  Systematic feedback  Goal oriented  Real time information

85

86

87

88

89

90

91

92

93

94

95

96 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations

97 Information Systems Two Primary Advantages  Process for development  Cumulative result of that process

98 Information Systems Typical Dealer Systems  Few alternatives  Limited flexibility  High cost  Functionality does not exist

99 Information Systems Our Advantage vs. Dealers  Started with a blank slate  Tuned to the concept  Re-applied learning  Half the cost  Highly flexible

101 Information Systems Future Direction  Layer on the next generation  Tuned to the concept  Re-applied learning  Half the cost  Highly flexible

102 Purchasing/ Inventory Management Information Systems Reconditioning Consumer Offer PROPRIETARY OPERATING PROCESS Process-driven Finance Originations Finance Originations

103 Consumer Finance Finance Originations  Maximize sales  Minimize risk  Optimize profitability

104 Consumer Finance Maximizing Sales  CarMax consumer offer – Low no-haggle prices – Choice – Customer-friendly process

105 Maximizing Sales Traditional Negotiations  Payment  Vehicle price  APR and term  Trade-in  Ancillary products

106 Process Flow  Fast  Efficient  Technologically advanced Maximizing Sales

107 Application Routing Prime Non-prime KMX App. Routing Customer Views and Chooses From Among all Offers Transmission Non-prime Prime Decline Prime #2 CAF KMX App. Routing KMX App. Routing KMX App. Routing Maximizing Sales

108 Maximizing Sales Technology Advantages  Connectivity  Scale  Data collection  Point of sale support  Accuracy / compliance

109 Consumer Finance Consumer Benefits  Competitive price  No negotiation  Choice  Customer-friendly

110 Consumer Finance Minimizing Risk  Transparent loan originations: - Consumer risk - Vehicle risk - Intermediary risk

111 Consumer Finance Optimizing Profitability  3rd party finance company selection: - CarMax-specific programs - Stability and scale - Balanced agreement

112 Consumer Finance Finance Originations  Maximize sales  Minimize risk  Optimize profitability

113 GROWTH PLAN

115 Organic Growth  Creates value  Not acquisition dependent  Not 3rd-party constrained Growth Plan

116 Opportunity Scale  Market: $265 Bn  Currently: 18%-20% of U.S.  Mature stores: 8%-10% market share Growth Plan

117 Expanding The Opportunity  Market share experience  Higher-density storing - Charlotte - Orlando - Las Vegas - Richmond Growth Plan

118 Growth Plan To Date: Growth Plan

119 Growth Plan: Next 3 Years Growth Plan

120 Used Car Store Model Growth Plan

121 Average Store Investment Growth Plan

122 Investment Returns HistoricalROIC  Comparable Standard and Satellites (FY03)18.7% (CAF normalized)  Total CarMax (FY03)12.9% Prototypical  Standard (Yr 5, CAF normalized)14.9%  Satellite (Yr 5, CAF normalized)16.6% Leading Retail Comparison (‘92-’02 Avg.)  Home Depot14.6%  Wal-Mart12.4% Growth Plan

123  4-year goal: $8 Bn  Comp used-unit growth : 5%-9%  New store openings : 15%-20%  New store openings  Store margin expansion  Corporate overhead leverage Sales Growth Profit Growth Growth Plan