This piece, the full version of which appears in the upcoming Dec. 15 print edition of Auto Remarketing, delves into the recent quarterly results and developing trends at publicly traded online auto marketplaces CarGurus, Cars.com and TrueCar.

Each of these companies released their third-quarter results in November and held accompanying earnings calls.

We share the top-of-mind trends at each company; next up is Cars.com in Part II. 

Part I can be found here

Part III can be found here 

Cars.com focusing on dealer value in 2020

Alex Vetter, president, CEO and director for Cars.com, sees a stronger lead-generation company serving auto dealers in 2020 after making substantive improvements throughout 2019.

The company reported third-quarter revenue of $152.1 million, down $17.2 million, or 10%, year-over-year, in line with expectations.

Vetter said results were driven by affiliate market conversions, giving the company full control of its customer network, growth in SEO leadership improving its brand strength, a partnership with General Motors, and improvements in operational efficiencies.

“We are further along with dealer retention and cancellation rates, which have stabilized,” Vetter said. 

Dealer count remained a challenge, which declined in the quarter in Cars.com’s affiliate and direct markets.

“The improvement in dealer count is more a marathon than a sprint, and the initiatives around traffic and lead growth, product innovation, sales effectiveness like our turnaround in SEO, takes time,” Vetter said, “but substantially makes our subscriptions much stickier.”

Based on data from its Roxanne event tracking technology acquired with Cars.com’s acquisition of Dealer Inspire last year, consumers are cross-shopping between Cars.com and a dealer’s website and are more engaged and likely to buy a car from that dealer, Vetter said.  He said such analytic tools and solutions are a competitive advantage for the company.

Vetter said third-quarter growth with unique visitors and traffic was up 22% and 27%, respectively, year-over-year. He said SEO visits and leads were the highest for the company in 20 years.

A chart showing Cars.com traffic sources, published in the third-quarter financial slide deck, showed that just 29% of its traffic is from paid sources, the remainder organic.

“Translating these notable audience achievements and the market-leading dealer count is the ultimate objective. To do this, we have to drive quality leads to our customers, which will improve their ROI from our platform. Our organic sources of traffic are very valuable to our customers, because they are getting quality traffic that they can get only from Cars.com,” Vetter said.

Cars.com reported these key third-quarter metrics and highlights:

  • Average monthly unique visitors of 23.1 million, up 22% year-over-year.
  • Traffic (visits) of 144.4 million, up 27% year-over-year.
  • Mobile traffic was 73% of total traffic, compared to 68% in the third quarter of 2018.
  • Dealer customers of 18,635 as of September 30, 2019, down compared to 18,891 as of June 30, 2019, driven by affiliate conversions and a decline in direct marketplace customers, partially offset by growth in digital solutions customers.
  • Direct monthly average revenue per dealer was $2,069, down 2% year-over-year, excluding revenue from dealer websites and related digital solutions from Dealer Inspire; when revenue from dealer websites and related digital solutions is included, the average revenue per dealer was $2,174 for the third quarter.

Cars.com announced it is now working with General Motors dealers as one of four certified providers to provide digital website services to 4,100 GM dealers.

The company also began relationships with Hyundai and Mitsubishi. Vetter expects these subscription-based website development revenues to be a growth driver “for years to come.”