Cars.com is being told to profit or sell

[ryan.leslie]

I don't know... the NY Post??? What does Cliff Banks have to say?

 

[Jeff Kershner]

I was just reading this...

 

[ryan.leslie]

I don't know... the NY Post??? What does Cliff Banks have to say?

Cliff said "Sure, right after autonomous cars are mainstream, franchise laws are deemed unconstitutional putting all dealers out of business and hell freezes over." (That was a VERY rough paraphrase, but suffice to say he had significant reservations.)

 

[jon.berna]

We had a good chat about this today at Driven Data. Here were some of the key points.

1. CDK was blocked by the FTC to acquire auto mate Link
- This doesn't necessarily mean the same would happen again but with the recent website acquisition CDK made, perhaps

2. CDK cash on hand was at ~800M prior to the eleads sale as of Sept is at ~312M
- Of course they can finance and don't need 100% of it to control cars.com but it's not cheap.

3. Cars.com is losing to Cargurus in distribution efficiency just look up Cost of Revenue on both 6.41M / 119M vs 39.95M / 169M
- How would CDK help on this front, I don't see efficiency getting better post sale.

4. This feels like a jab at Cars.com with a bonus of scaring Cox @joe.pistell may have a read on it
- Cars has a great team and I want to see them stand on their own and fight

 

[joe.pistell]

Hi @jon.berna.

You know I was a self-employed stock trader for a decade, I still dabble in it a bit. Regarding valuations, I love this site:
https://simplywall.st/compare/NasdaqGS:CARG-NYSE:CARS




On this metric alone, CARS is undervalued. But, on a PEG basis, BOTH are overvalued. CARS is barely growing > inflation, where CARG is growing ~20%. With CARG's growth comes a far higher PE, and higher PEs = higher risk (e.g. the execution of the vision falls short).


At 1st glance, CDK buying CARS to me is a strategic fit. It's safe to say that many GM dealers are going to jump off CDK... just because they can. Buying CARS buys DI, so, CDK can keep some of the defectors in the family. CDK can look at Cars.com's platform & brand as a strategic play that could be a door to help them morph into MAAS (Mobility As A Service).

My $0.02 sees CDK takeover of CARS as yet another nail in the coffin of innovation in our space. Everywhere we look, the theme among the big boys are "consolidation, not innovation".

The big boys had better be careful, this obsession to rollup vendors into a "single sign-on, you can't leave me platform" meets little resistance when SAAR is rising -AND- when profits are good. BUT... profits from sales are trending down with no end in sight. When SAAR rolls over (not if SAAR rolls over), dealers get out the machete and wack big marketing expenses with little to no analysis.

In my travels, I sense that dealers are shutting down all the little $500 p/mo vendors and wanting to cut one of the Big 2 (AT or CARS) and leave CARG.

We've come to that place in the auto-sales-cycle, there's a shift in the air. Nothing at NADA had wow-factor. I think the new theme for dealers is "hunker down for the coming storm".

 

[john.quinn]

Hi @jon.berna. My $0.02 sees CDK takeover of CARS as yet another nail in the coffin of innovation in our space. Everywhere we look, the theme among the big boys are "consolidation, not innovation".

The big boys had better be careful, this obsession to rollup vendors into a "single sign-on, you can't leave me platform"...

Amen!

Those of us who can remember the mid 90's might remember that there weren't very many players in the automotive technology space, a fact that helped spur the explosion of solutions -- silo'd solutions, sure -- that proliferated the landscape through the aughts and early teens.

Kinda like the "Big Bang," no? All matter was condensed into a single point, then BOOM, everything exploded outward and onward. Eventually, gravity will pull it all back into a singularity, then BOOM -- it all happens again. Maybe

 

[mikesayre]

If CDK can make it happen, they would be an instant "one stop shop" competitor in the market. I think that would ultimately be a good thing for the OEM networks & dealers as well. Can't wait to read more takes on this..

 

[john.quinn]

If CDK can make it happen, they would be an instant "one stop shop" competitor in the market.

The best, the MOST you should hope to see is a consolidated statement/bill. And that will take years, as you hear and read about all the great integrations that actually aren't happening

 

[mikesayre]

The best, the MOST you should hope to see is a consolidated statement/bill. And that will take years, as you hear and read about all the great integrations that actually aren't happening

I was thinking the CDK website offering would be improved instantly, and if they could get OEM approved adoption across the board.. as far as Cars.com goes it could be rolled up into the existing CDK sales & advertising division.

 

[john.quinn]

I was thinking the CDK website offering would be improved instantly, and if they could get OEM approved adoption across the board.. as far as Cars.com goes it could be rolled up into the existing CDK sales & advertising division.

I agree that it all sounds sooo simple and logical. And maybe, just maybe, CDK can pull it off. Historically, it's been said a few times, never done. Fingers crossed