How Does CarGurus Make Money?

by Amanda Postma
Business Models, Study - 8 months ago

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What is CarGurus?

CarGurus is a site where private sellers and car dealerships can sell new and used cars to car buyers for great deals. The car listings site was launched in 2006 by Co-Founder Langley Steinart, who is also the Founder of Tripadvisor. The company takes a new spin on car shopping by using data analytics and proprietary algorithms to answer every question car shoppers may have.

How Does CarGurus Make Money?


While listing your car on CarGurus.com as a private dealer is absolutely free, selling it is a different story. There’s a $99 fee that you have to pay when the car has been sold. As for the dealerships, they’re not so lucky. The car dealerships have to pay a fee for a lead. It’s important to note that the dealerships are not paying for a guaranteed customer, just a lead to one. When a customer contacts a dealer on CarGurus.com, the company makes about $15.

The company’s real moneymaker is through ads. If you notice during your car research that the website features links to websites where you can buy a certain car, those links are there for a reason. CarGurus gets paid by a variety of advertisers for featuring relevant offers throughout its site.

The featured ads are kept completely separate from the rest of the site’s content. So you don’t have to worry about advertisers getting preferential treatment. And you can rest assured that those advertisers don’t take a portion of the car payment, nor do they add fees.

How Does CarGurus Work?

The company analyzes available vehicles and ranks them from best to worst using mathematical algorithms. This ranking is what CarGurus call Instant Market Value. It’s determined by looking at similar, current and previously sold car listings in the car buyers’ area. CarGurus compares the listed price with the Instant Market Value, and that’s how the company comes up with your savings.

The company also takes dealer reputation, accident history, options, mileage and the condition of the car into consideration when creating these lists. The IMV calculates over 6 million listings to compare these variables, that way when you generate a search you’ll have the best matches to what you’re looking for. Cars that have been priced with the best customer savings always rank first, so you can feel good about the price of the car.

Additional ranking boosters come from dealers who have received positive reviews from other CarGurus shoppers. The company offers a space for consumers to leave reviews so that you can feel secure with who you’re buying a car from and you know what to expect from that dealer. Sometimes communication with dealers is a bit spotty. With some help from CarGurus, dealers and car shoppers are instantly connected. If you find a car that you’re interested in all you have to do is enter your email address and/or phone number. Then the rest is left up to the dealer.

Many reviews have stated that CarGurus is truly unbiased. With more than half of American car dealerships paying to post their car listings on CarGurus.com, it’s easy to assume they’re listed at the top. But the company doesn’t believe in putting paying customers’ vehicles first just because they have money. The best deals with the best dealers will be listed at the top.

Is CarGurus Reputable?

With more than 15 million visitors on the site every month and more than half of American car dealerships using the site to post their listings, it’s safe to say CarGurus is the real deal. What’s even more impressive is that CarGurus gets more daily traffic than AutoTrader™, Cars.com™, KBB.com™ and Edmunds.com™.

For those who are selling a car, whether a private dealer or car dealership, you can do so with peace of mind. Every dealer receives the protection of up to $75,000 to ensure their online transaction is secure. Even buyers are provided financing options.

Can You Negotiate Price on CarGurus?

Of course, you can! And CarGurus is there to be a resource so that you pay the best price. Each listing on CarGurus.com provides valuable information about the car. You’ll be able to see how long it’s been listed on the site, how much the price has dropped and how many other potential car shoppers have saved the car. So whether you thrive on making deals or feel queasy at the thought of buying a car, CarGurus is there to help you negotiate.

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