CarGurus, a significant player in the online automotive marketplace, has reportedly initiated another round of price increases for dealerships. This move has sparked considerable debate and concern within the dealer community, particularly as it seems to capitalize on the unusual market conditions experienced in recent months. The justification cited by CarGurus revolves around a surge in used vehicle traffic during June and July, a period when dealership inventories were notably constrained. While increased traffic is generally positive, the question arises whether leveraging this specific, possibly anomalous, period to justify a price hike is equitable for dealerships relying on CarGurus as a dealer pricing tool.
The argument from CarGurus appears to be rooted in the principle of supply and demand. With fewer used vehicles available and heightened consumer interest, their platform arguably became even more valuable to dealers seeking to move inventory. However, dealers are questioning the sustainability and fairness of this approach. Many view CarGurus as a supplemental tool, not the cornerstone of their business model. The automotive digital landscape is rich with alternative platforms and strategies, suggesting that dealerships are not entirely beholden to a single dealer pricing tool, even one as prominent as CarGurus.
Dealers possess a degree of leverage that CarGurus seems to be overlooking. While CarGurus may be prepared to lose individual dealerships, a widespread exodus could significantly impact their revenue stream. The collective spending of dealerships represents a substantial income for platforms like CarGurus. For a single dealership, the cost might seem manageable, but aggregated across thousands of dealers over several years, it translates to a considerable sum – potentially exceeding $100,000 for larger operations. This financial reality underscores the interdependence between CarGurus and its dealer partners. The contractual clauses preventing dealers from openly discussing specific rates further complicate transparency and negotiation.
The core sentiment within the dealer community, as voiced in online forums and discussions, is one of resistance. Dealers are wary of succumbing to what they perceive as opportunistic pricing tactics. The situation is being likened to a parent standing firm against a child’s demands – “Do not give into the terrorist’s demands.” This analogy emphasizes the principle of not rewarding aggressive pricing strategies, especially when based on potentially short-lived market fluctuations. The consensus appears to be that while CarGurus offers value as a dealer pricing tool, its role is supplementary, and dealers have viable alternatives. Therefore, absorbing unjustified price increases is not a palatable or necessary course of action. Dealers are encouraged to explore alternatives and collectively push back against these perceived price hikes, reinforcing the principle that fair partnerships are built on mutual value and respect, not on exploiting temporary market imbalances.
