CarGurus unethical price gouging hurting our dealership

Omniah Grace

Why is CarGurus able to discriminate against dealers that do well on their site by charging exorbitant rates? We are a tiny 4 person dealership operating in a 400sq foot office space with a small lot with average 40 cars in inventory and more in the summer when we are lucky. Cargurus says we are performing well and want to go from around $2,000 per month to $5,000 per month. This is a struggle we face with them yearly, they keep trying to increase the price per month. What recourse do we have as dealers to fight against this?

 

Derrick Woolfson

One of the things we did, and it paid off big time was to cut ties with a lot of third-party lead sources. And spend that money on AdWords, etc. We not only increased our leads, but we also increased our profits. 

Joe Jackson

I recently read an extremely successful NYC dealer's LinkedIn post where he had the same issue. He discontinued the service and reinvested the money elsewhere with better results. He said if they never tried to raise the price they would have left the program intact so he views it as a blessing. What metrics are they using to determine they deserve that big a price increase? How many leads are they sending you? And if they're sending traffic to your website are you inspecting the quality of that traffic in your Google Analytics. I agree with Derrick. Google Ads (long tail keywords) is a good place to start for low funnel car shoppers. You can also test a combination of Craigslist, Facebook Marketplace, Facebook Dynamic ads, and LetGo for about the same $2,000 investment with as little as a 90 day commitment. You may be pleasantly surprised and thankful they decided to raise your price and forced you to explore other options. It may be a blessing in disguise. Good luck. I'm interested to hear which way you go.

Omniah Grace

Hi Joe, thanks for that information, its great to hear that others were in the same boat and ended up doing well. 

The rep for CarGurus states that its a combination of factors: the lead volume and click-throughs but more specifically if a lead comes in and we remove it off the site (mark it as sold), they would then take credit for that "sale". 

The real story is that we advertise heavily on ALL third party sites since we are not on a main road and are quite hidden. We are forced to source our inventory carefully and have a high turn rate (20+/year) and every third party has told us that we are top performers. 

Just because they send us a lead and we mark it sold, does not mean that CarGurus should take credit. Many times, it is another third party.

We are closing about 8% with CarGurus, 14% on our website, 10% Autotrader and 34% Google we also advertise with Craigslist, True Car, Facebook, Cars.com, CarFax... and they are all around 10% conversion. Many of the CarGurus leads are junk because they come in w/o phone numbers so its hard to prospect them.

So I could very well relocate that money into higher converting platforms (esp Google and Facebook campaigns as you suggested). 

Thanks again! 

 

 

Joe Jackson

My pleasure. Yes, I agree it's not logical for them to conclude that their lead is responsible for the sale. Especially when the average close rate on a 3rd party lead is say just 10%. Now if they sent you 10 leads on that vehicle, and you marked it sold, that would make more sense. You know your numbers so I have no doubt you'll find a way to overcome this by supplementing with new sources or doing more of what is working. Good luck.

Joti Basi

@OmniahGrace - do you have an analytics solution that ties every sale to the lead source?  

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