Is Cars.com Really a Great Place to Find a Vehicle? – Businessweek
A coalition of five newspaper companies has put a “for sale” sign on the window of Cars.com. The website, started in 1998, has been a rare dot-com success for the long-suffering, ink-fueled newspaper industry. It’s an impressive platform built around a massive inventory of new and used car listings alongside financial calculators, dealership reviews, and buying guides. Looking for a Ford F150 within 10 miles of midtown Manhattan? Cars.com finds 21 new trucks ranging from $35,290 to a $59,780 “Raptor” model, as well as 25 used models.
But Cars.com didn’t become a $3 billion business, to cite the figure mentioned in the Bloomberg News report on the terms being sought, solely by helping car shoppers. Catering to car dealers has been just as critical to its success, if not more.
The range of options the site sells car broker is lengthy, from standard upgrades—preferred placement on search results, old-school online banner ads—to the additional consultant-like offerings. Cars.com can teach dealers how to text potential customers, navigate social media, analyze online search patterns, and respond to negative reviews. It even crawls search-engine data and sells leads to potential buyers.
For a consumer-serving business to draw so much revenue from nonconsumers is not without risk. “They have certain business requirements that they have to meet, which may or may not have the best impact on the consumer,” said Arianne Walker, senior director of auto media marketing at J.D. Power.
Walker said Cars.com seems to be walking that line admirably, although as long as car dealers keep doing business as if it were 1977—with the bad coffee, corny pitches, and bait-and-switch financing—it should be just fine. Floor mats are never free, right?
But car dealerships are catching up … at least to 2005 or so. Their websites are getting better and more responsive. And a rash of entrepreneurs are developing ways to schedule remote test drives, sell new cars via online auctions, and communicate with buyers via dedicated apps. A few brave dealerships are even accepting Bitcoin.
Some third-party sites are going a step further than Cars.com. TrueCar, for example, has a network of 8,000 “certified dealerships” that offer guaranteed prices for specific models on its platform. It gets $300 for every reference that ends in a sale.
It showed us only three Ford F-150s near Manhattan, but one could be had for less than $33,000. “We’re not a shopping site—we’re a buying site,” says Scott Painter, TrueCar’s chief executive. “Dealers have to find ways to cut costs out of their business and we’re focused on helping them do that.”
Meanwhile, Tesla Motor’s (TSLA) straight-to-consumer strategy does an end-run around both dealerships and Cars.com. A search for the slick electric sedan turns up one—that is, a single Tesla for the entire country—on the site. Click on it, and Cars.com notes: “0 dealerships found.” Teslas are sold through a single Web store on which a shopper picks the one he or she wants and pays the corresponding price, no lousy coffee or consumer-empowering website required.