Drops in both demand and unit prices in the used car market contributed to unexpected weakness in CarGurus’ latest results, executives said Tuesday (Nov. 8) during the company’s quarterly earnings call.
Following the news, the online automotive platform also saw its stock tumble more than 20% after the market closed.
CEO Jason Trevisan said in a press release that despite improvement in a few areas, the company fell short in many others.
“Our digital wholesale business was impacted by unpredicted intra-quarter volatility, which worsened as the third quarter progressed, where we saw a decline in used car retail demand and wholesale volumes as well as relatively rapid wholesale unit price declines,” Trevisan said during the call.
The listings business for used and new cars, on the other hand, exceeded expectations as its revenue and the total number of paying dealers grew despite softening consumer demand.
During the quarter, CarGurus continued its transformation from a business supplying only listings to one also enabling the buying and selling of vehicles.
“While we are still early in the journey of fully integrating digital retail and digital wholesale with our core listing business, I’m proud of the progress we have made this year as we put in place building blocks for long-term success,” Trevisan said.
The company’s research has found that the share of consumers who want to do more from home during their next vehicle purchase has risen from 60% to 70%.
These are the consumers CarGurus aims to reach with its digital retail platform.
“The key to success on the customer experience front is the choice for consumers to buy their next car precisely the way they want, whether fully online or with an in-person, in-dealer interaction,” Trevisan said.
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