The newly installed CEO of CarGurus said Thursday (Feb. 11) the online automotive marketplace left 2020 with good momentum, citing increased subscription and average revenue rates from dealers.
In delivering its fourth-quarter results, the Cambridge, Massachusetts-based company reported that its revenues had almost fully recovered to pre-COVID levels, falling just 4 percent from the same period last year.
“With most forecasts for 2021, indicating better year over year car sales, we believe dealer marketing trends will continue trending up and eventually return to pre COVID spend levels,” CarGurus CEO Jason Trevisan told analyst on a conference call, adding that the company was more running better now than it was before the pandemic.
“Our business is more efficient coming out of COVID,” the former CFO promoted to CEO said, “and we’re successfully growing subscription spend with existing, returning and new dealers.”
As such, CarGurus said its investments in the digital, retail and wholesale segments would complement its listing platform and provide “continued growth, profitability and scale for years to come.”
Dealers Bouncing Back
At the close of the year, CarGurus said it had 30,631 paying dealers on the books, 78 percent of which were in the U.S., with the remainder in Canada and the U.K.
While that reflected a 9 percent decline from 2019, the fees it collected from U.S. dealers were actually up 6 percent, bringing the quarterly average subscription rate to $5,304.
In addition to its core auto listing business, CarGurus said it is adding two complementary strategic pillars to its core listings business, with the addition of digital retail and wholesale platforms.
“Digital retail is an evolution that we’re building in close partnership with our dealer customers,” Trevisan said, “allowing dealers to market their cars to consumers who may never enter their showroom.”
To that point, the rise of sight-unseen car buyers, especially since COVID, has seen continued growth in the number of dealers offering delivery services on the CarGurus platform, a phenomenon that not only increases choice for consumers but expands the market for dealers.
As far as that marketplace is concerned, CarGurus said it now has almost 45 million unique monthly users worldwide, three-quarters of which are in the US., a figure that is just 1 percent shy of pre-pandemic levels.
Financing + Fully Online
At the same time, CarGurus is also increasing its consumer financing capabilities, a time-saving step that benefits customers and dealers.
“This is a win-win for both consumers and dealers, as it moves more steps of the car purchase online, and provides dealers with highly qualified consumer leads.”
The financing effort comes at a time when both new and used vehicle prices have been rising, with the average new car costing just under $40,000 now, and the average full size pickup truck selling for $55,000.
“A complete online auto transaction is complex,” Trevisan said, “yet … a growing portion of consumers are eager to complete more of their transactions online and we’re committed to helping dealers of all types serve this consumer demand.”
As far as the future is concerned, Trevisan said he will continue to “build, partner, or acquire” the capabilities necessary “to enable consumers and dealers to not only shop for cars on our platform, but ultimately conduct the entire transaction fully online.”
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