CARGURUS dealer price is going to double this year, again! They are pushing dealers' back to the wall.

CB Lee

I am a used car dealer in Chicago suburb. We recently received an email  from CARGURUS, the "renew notice", and our monthly advertising bill is going to be doubled again. Wow!!! Did US just had a currency inflation crisis like Russia that I didn't know about? I asked around my dealer friends, and they all had same experience. Most of them felt been put under the gun by Cargurus and asked for ransom. 50% are planning to leave and 50% are bargaining with them. This is the 3rd time in 3 years that we have been using CARGURUS the price had been doubled. 

But CARGURUS's management  must missed out the fundamental problem with CARGURUS's business model and sustainability. They have been successful so far to make itself one of market makers for used cars.  The success is mainly driven by their special function of "let consumers to easily compare deals with their algorithm based deal grades." So dealers have to price their cars very very low to be able to graded as "great deal" or a green mark. Consumers tend to mostly interested in "great deals" or only looking for green marks. It is such a great idea for consumers, but it is pushing the dealer's margins much lower or some dealers started playing "tricks" on the cars. 

The problem is: on one hand, CARGURUS is the knight who is driving prices lower and creating more value to consumers. Sounds fantastic! On the other hand, they are trying to tax dealers (the people who is actually paying for their service) for more more money every year and running with very short patient, too. Their tax rate is not gradually going up but going up by multiples. The equation become very very uneven, and I believe this year the system will be near the breaking point.  

I am putting together a group of dealers to counter Cargurus's offense, and try to bring their management to the bargaining table. Hopefully we will have a group big enough could affect their bottom line just like they are trying to do for ours. Please email me wicago630@gmail.com if you are interested. 

Ricky Patrick

Just stop using them. If their service is worth the cost, pay for it. If it's not worth the cost, don't use them. I don't think getting our pitchforks is necessary.

CB Lee

My point is Cargurus's business model is trying to pushing down the whole economics of car market. Pushing dealers to take the least amount of profit, then dealers have to push down trade in prices, the cars residual values are going lower, and new cars will be harder to sell because newer used cars are cost much less. Cargurus does not create value for the economy but reduce the whole economical value of car dealers. 

Cargurus currently is ranking 3rd for auto related marketing sites. That is why I am very serious about this situation. They will keep pushing their way in if we the dealers didn't take a stand on the situation. Just one by one, Cargurus as the size of their company now, they won't care if one dealer stay or leave. But  if a pool of 100s even 1000s dealers start to notice the situation, they will be affected. 

CARGURUS has to be stopped! We have to make them to change their way of doing business and tax dealers. Again if you are interested, please email me wicago630@gmail.com.

Mark Dubis

"They have to be stopped!"  Cmon, this is a society based on capitalism and the free market. They can charge whatever they want, and if customers feel they are worth the $$ they will continue to use their services.  You can cease  using their services, and you can even band together with other dealers and start your own classified listing site.  I'm working with some companies that are doing just that.  There are some great third party vendors who really help auto dealers, but there are also some that do not care about dealer profitability or value.  When you find dealers like that, just stop using them and they will go away. 

CarGurus isn't the only company that does this. I empathize with your situation and as others have suggested, if the service isn't worth the cost to you, just cut ties. Craigslist used to be free until they saw how much they could capitalize on charging dealers a fee to post inventory. It sucks, but that's business.

CB Lee

Totally agree it is free market and we can just cut ties to any supplier. I am all for it to have free competition. My point is we as singular dealers don't have much leverage to take on vicious attacks from outside. What can we do to defense together?

At least I am putting the message out , so other dealers could know Cargurus's tactics.

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