Car dealers need used vehicles. Car buyers want to sell, but they’re not crazy about walking into a dealership. Enter CarGurus, which debuted a service on Friday (July 30) designed to bring the two together.
According to Forbes, the Massachusetts-based online car marketplace has leveraged its majority stake in CarOffer to launch its “Instant Max CashOffer.”
Car sellers can go to the CarGurus website, enter the information about their vehicle — make, model, mileage, etc. — and a location where the car can be picked up and delivered to a dealership. Within minutes, the seller will receive the highest offer from among thousands of dealers. Payment comes when the vehicle passes inspection. The service is free for consumers and launched Friday in Massachusetts, Florida and Texas.
“Consumers want to do more of the vehicle buying and selling process online, and that has accelerated during the pandemic,” said Lisa Iannucci, CarGurus vice president for commercialization.
At the same time, dealers are on the lookout for used cars in salable condition. Data for CarGurus shows the average price of a used vehicle exceeded $28,269 last month, an increase of 38.6 percent from the prior year, while the average new vehicle sold for a little under $42,000, 11.2 percent higher than June of last year. Meanwhile, an ongoing computer chip shortage is hampering new vehicle production.
“We’re seeing a unique market where a limited supply for new vehicles, courtesy of the microchip dip, [is] coupled with high demand for private mobility coming out of COVID,” Kevin Roberts, CarGurus’ director of industry analytics, told Forbes.
CarGurus’ move is in keeping with a larger trend toward digitization in the auto-buying experience, as PYMNTS noted earlier this week. Research has found that more than half of all auto dealers plan to invest in identity verification and authentication improvements. Consumers and dealers alike say that the digital processes take too long, a concern echoed by less than half of all banks, credit unions and peer-to-peer lenders.
“The auto industry is pretty complex,” Equifax Chief Product Officer Mark Luber told PYMNTS, “and it’s one where you have lots of very small dealerships who themselves are effectively merchants.
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