Turning the Digital Tables: Car Dealers Become Buyers

Here’s a sign of the times showing how used-car inventories are in such short supply at U.S. dealerships:

CarGurus, an automotive marketplace website that consumers typically visit to buy vehicles from dealers, debuts a digital platform that allows consumers to sell cars to participating dealers who need to replenish their dwindling supplies of pre-owned vehicles.

Called CarGurus Instant Max Cash Offer, it instantly presents consumers the highest offer available from thousands of participating dealerships. 

“We think we can meet an unmet need,” Lisa Iannucci, CarGurus vice president-commercialization, tells WardsAuto.

Here is how it works:

Interested consumers visit the no-haggle “Sell My Car” page on CarGurus.com. They then enter their vehicle’s information. They quickly receive the best offer. Once a seller opts to proceed, the vehicle is picked up and paid for following an on-the-spot inspection to verify its condition matches what the seller said on a questionnaire section of the web page.

Questions include asking for the 17-character vehicle identification number (that provides a range of information about a specific vehicle), mileage, license plate number, whether the vehicle has been in an accident and if it is damaged in any way.

“We’ve tried to strike a balance with the questions,” Iannucci says. “We want to make it lightweight for the consumer, but also detailed enough for the dealers.”    

A picked-up vehicle will be brought to local dealers, who will have the option to purchase it for the CarOffer matrix price or take a pass.

Lisa Iannucci

Instant Max Cash Offer rolls out first in Florida, Massachusetts and Texas because those states have a large representation of auto consumers and CarGurus dealer clients, says Iannucci (pictured, left).

Sam Zales, the company’s president and chief operating officer, says: “We are headed towards a digital world where shoppers and dealers are both buying and selling vehicles online, and CarGurus is in a prime position to help both do so with the technology-first approach that we are known for in the industry.”

The digital platform for the new program comes from CarOffer, a company CarGurus acquired in January. The platform originally had been a way to conduct dealer-to-dealer wholesale vehicle sales and trades. “We’re taking it up a notch,” Iannucci says. “This is a game-changer for dealers and the CarGurus audience.”

Because of the inventory dearth, today’s used-vehicle prices are relatively high. That may tempt many car owners to sell their vehicle. But won’t they then have to turn around and buy a replacement vehicle that also is pricy?

Not necessarily, Iannucci says. “Maybe it’s an extra vehicle, or maybe they are moving. There are various situations.”

She cites two factors that point to potential success. First, car consumers are rapidly becoming more interested in online auto transactions versus in-person deals. Second, dealerships are hungry to find new and efficient ways to acquire vehicles amid the current industry shortages.  

Danny Archibald, owner of Archibald’s, a dealership east of Seattle, is looking forward to participating in the new program.

“Inventory acquisition is a major priority at Archibald’s and we often look for ways beyond auctions or trade-ins to purchase vehicles, and that includes searching for consumers who may not immediately come to us to buy a car,” he says.

Asked what could go wrong with the new initiative, Iannucci says, “We’ll test and learn. CarGurus has always been big on data and testing.”

Steve Finlay is a retired WardsAuto senior editor. He can be reached at [email protected].