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Cargurus might be coming for you soon. PRICE INCREASES

Jim Lease

Boss
Sep 23, 2014
4
4
Awards
1
First Name
Jim
We originally signed up with CarGurus in January of 2017. In 2018 they hit us with a 19.5% price increase. In 2019 they hit us with another 16% hike of the ol' monthly rate.

Earlier this week I was notified that they are planning to raise our monthly subscription price by 62%. If we don't give in to the 3rd party demands, they will terminate our partnership at the end of the month.

We've faced tactics like this from the 3rd party advertisers before, but what surprised me is:

1. This price increase is coming at a time when most dealer inventories are roughly half the size of what they were at this time last year so the cost per listing is already twice what it used to be.

2. I would think that any proposed increase would at least be similar to or fall in line with the size to previous increases (19.5% and 16%).

3. 62% … A customer walks into a dealership and buys a new GMC Acadia for an outright price of $47,000. The following year the customer totals out their Acadia and returns to the dealership to discover that GM jacked up prices so high that an equally equipped Acadia is now going to cost $76,140 after rebates and dealer discounts? Does the customer buy the 2nd Acadia or does the customer just leave the dealership and go elsewhere. Is there really a choice involved when there's a 62% price increase?

Just wanted to put this out there because if they're doing this to the dealership I work for, then they'll likely be coming for your dealership soon as well.
 
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ChrisR

Boss
Oct 12, 2015
263
248
First Name
Christian
That's the standard MO of CarGurus. I have had 100% increases pitched in the past.
 
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georgenenni

Rust & Dust
Apr 13, 2012
139
98
First Name
George
@Jim Lease If you want to share some specific numbers could help us see how you perform against benchmarks. Take how much you’re paying each month, divided by the reported monthly VDPs. This should be under $.50, but with CarGurus is typically $.30 or below. Then also take the monthly expense divided by a combination of lead forms, phone calls, chats as reported from the admin side of CG. This number should be under $50, CG will typically be under $30.

I am not making excuses for their bad behavior, or predatory pricing, but generally they, along with Carfax classifieds will be your best performers on cost per lead Measurement. I find that when you have the conversation with the third parties using these metrics, you have a much better chance of success with negotiations versus just saying “I want to pay less“.
 

Jim Lease

Boss
Sep 23, 2014
4
4
Awards
1
First Name
Jim
Our strategy will be the same strategy as a responsible parent's strategy when their teenager is throwing a vocal fit in a department store because their parent won't buy them exactly what they want. "Do not give into the terrorist's demands".

Cargurus is justifying their price increase on the used vehicle traffic jump most dealers saw during June and July when our used vehicle inventory dropped to half the size it was back in March. Their acute viewpoint justifies the price hike attempt in their eyes.

According to the old car biz saying, "When all else fails, sell the car." Of course this means, it's better to sell the car vs. possibly sitting on used car for another 3 mos. and watching its value drop by another $900.

Cargurus is a supplemental tool, but they're not a staple of our business model and there are too many other options out there to allow them to push us around.

They are prepared to cut us loose and sit on their product indefinitely. However if we leave and don't return, that thousands of dollars of income they're saying they don't want and don't even care about. Over the course of 2 years, that could be upwards of $100K. Heck, it could hypothetically be well over $100K depending on the size of the dealership. Of course there's the silly clause in their contracts that forbids dealers from openly disclosing the rates they are charged so we can't discuss specifics.

I'm very thankful for the support from the DR community. I just wanted to put it out there that Cargurus seems to be on the price hike warpath again and they're basing this batch of price hikes on the anomalous situation that happened in June and July.
 

John V.

Boss
Jan 15, 2015
113
121
Awards
1
First Name
John
We cancelled CarGurus in January and have never looked back. Reinvested half into FB ads and pocketed the rest. Break Free!!!:dance2:
 

MrDavid

Boss
Apr 6, 2018
1
0
Awards
1
First Name
David
Rule of thumb has always been to merchandise and price your vehicles to attract the most activity...
If the dealer does everything right, getting more activity to your vehicles should not be a reason for vendors to raise prices.

Cargurus is the only 3rd party who does not share their local shopper numbers and how they calculate their "impressions" metrics is closely held to their vest.
At the end of the day, dealers should be paying for the eyeballs (local shoppers/site visits), not how well our cars do on their platform since it's the dealer's responsibility to merchandise.
 
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ideveroux

Boss
Feb 13, 2010
3
2
Awards
1
First Name
Ian
We originally signed up with CarGurus in January of 2017. In 2018 they hit us with a 19.5% price increase. In 2019 they hit us with another 16% hike of the ol' monthly rate.

Earlier this week I was notified that they are planning to raise our monthly subscription price by 62%. If we don't give in to the 3rd party demands, they will terminate our partnership at the end of the month.

We've faced tactics like this from the 3rd party advertisers before, but what surprised me is:

1. This price increase is coming at a time when most dealer inventories are roughly half the size of what they were at this time last year so the cost per listing is already twice what it used to be.

2. I would think that any proposed increase would at least be similar to or fall in line with the size to previous increases (19.5% and 16%).

3. 62% … A customer walks into a dealership and buys a new GMC Acadia for an outright price of $47,000. The following year the customer totals out their Acadia and returns to the dealership to discover that GM jacked up prices so high that an equally equipped Acadia is now going to cost $76,140 after rebates and dealer discounts? Does the customer buy the 2nd Acadia or does the customer just leave the dealership and go elsewhere. Is there really a choice involved when there's a 62% price increase?

Just wanted to put this out there because if they're doing this to the dealership I work for, then they'll likely be coming for your dealership soon as well.
The choice is simple (we looked down the barrel of a 30% increase in 2018), ROI and Advertising cost per sale. Is your Cargurus gross high enough or are your sales numerous enough to absorb this increase? If not, cancel them, if so, ask yourself another vitally important question. If we cancel Cargurus, can we shift that budget to another source and maintain the status quo or increase it (SEO, SEM, other 3rd party vendors). If shifting doesn't forecast sunny skies, then your choice is clear.

I will say, you should spend a lot of time evaluating all your vendors, continually, to answer the questions above. Over the past years, we have eliminated cars.com, autotrader, edmunds, truecar and have just reduced cargurus by half as we have found SEO and SEM companies which have proven they can fill the gaps. With Edmunds intrusive TOS (basically giving them ownership of ALL your website data), Truecars text only ridiculousness, Autotrader's clear reliance on carfax for leads, cars.com poor lead quality and cargurus simple greediness without substance; it's far past time that more dealerships cut those cords. Only when dealers say no (and saying no means cancelling) will these vendors return to the proper place of giving dealers more substance.

Remember, If you cancel a program and later find that was an error, you can always sign them back up. They will NEVER turn you away...and returning accounts often negotiate much better than 10 year clients (they really don't care how long you've been onboard which is clear every time they pull this bull).
 
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