Cars Commerce has strengthened its position in the wholesale automotive space this week with the acquisition of DealerClub, a reputation-based dealer-to-dealer digital wholesale auction.

The purchase, which closed Thursday according to a news release, included approximately $25 million in cash and has a potential for additional performance-based consideration of up to $88 million.

DealerClub was founded last year by Joe Neiman, who also founded ACV Auctions.

“The acquisition of DealerClub is a critical step for Cars Commerce’s strategic vision to expand into the wholesale market by catering to the large dealer segment looking to gain operating and financial efficiencies by leveraging technology to trade used vehicles within a trusted network,” said Alex Vetter, CEO of Cars Commerce.

“By integrating DealerClub’s technology onto the Cars Commerce platform, we add transactional dealer-to-dealer wholesale capabilities focused on transparency and digital efficiency, and significantly extend our influence in the wholesale market by giving power and profits back to the retail community.”

DealerClub offers a reputation-based exclusive marketplace where “each member puts their reputation on the line and is accountable for the vehicles they sell based on a rating system,” the company said when announcing its launch last year.

Buyers using DealerClub to acquire cars can see how sellers rate in categories like sell-through rate, vehicle inspection accuracy and how consistently they provide titles.

Meantime, sellers can benefit with higher ratings that drive buyer confidence.

The reputation-based system is designed to drive trust and minimize arbitration disputes and title issues.

DealerClub currently has more than 650 dealer customers and its primary revenue stream is through transaction fees.

In a LinkedIn post Friday, Neiman said: “I could not be more excited to share that DealerClub has entered into an acquisition agreement with Cars Commerce, the parent company of industry-leading brands such as Cars.com, Dealer Inspire and AccuTrade. DealerClub is the first reputation-based dealer-to-dealer auction and is bringing power back to dealers, making it clear of the opportunity that exists in wholesale. I know that by joining Alex Vetter and the Cars Commerce team, we will be able accelerate our growth even faster and offer tremendous value for our dealer customers as we continue to leverage technology to simplify automotive. Come by the Cars Commerce booth #1426 in New Orleans this weekend to learn more!”

Acquiring DealerClub helps Cars Commerce move its trade and appraisal strategy forward while giving it an entry point into the $10 billion-plus wholesale car market, the company said.

Additionally, it brings in another revenue stream for Cars Commerce’s subscription business.

Cars Commerce acquired the Accu-Trade group in 2022, a deal that included Accu-Trade, Galves Market Data and MADE Logistics and allowed the company to “enter into the rapidly growing multi-billion-dollar digital vehicle acquisition and remarketing category with Accu-Trade’s best-in-class valuation and appraisal technology,” Vetter said when that deal was announced three years ago.

In Friday’s news release, Cars Commerce said the Dealer Club purchase, can “create long-term cross-selling opportunities and acceleration of AccuTrade adoption with an attractive full lifecycle platform that seamlessly integrates retail and wholesale operations.”

The company added that the acquisition, “Brings the transparency of reviews to the wholesale market for the first time and builds on the company’s legacy as the largest provider of consumer and dealership reviews in auto.”