We’re an extremely large pre-owned franchise wanting to break ground in the U.S. More precisely, Florida, Miami. (Yeah, we kind of DID chose one of the more aggressive markets of the nation to test the waters) We’re however quite proud of what we were able to achieve over the last 3-4 years; now opening a third store in the state, U.S has been quite good to us.

Running a velocity model in such an aggressive market obviously means slim margins and efficient cost structure. A vdp factory is what we aim to be, hence why a tremendous amount of work goes into merchandising and pricing these vehicles.

Now we all know Cargurus has been a ruthless competitor of Autotraders (some might even assume they surpass autotrader in overall traffic). Considering our business model, they were a perfect fit, a match made in heaven…. well up until yesterday. I get a call from Cargurus and surprise surprise, we have price hike on our hands. A price hike of 4X… Now heres where it gets REALLY interesting. The price hike is due to an increase of traffic of their platforms (I’ll swallow that one) and according to their pricing algorithm, our vehicles have been OVER PERFORMING in their respective radius. Yes, due to our vehicles generating a higher volume of vdp’s/leads, they have the courage and audacity to justify the price hike.

Im baffled on how running a velocity model, focused on merchandising, is COSTING me. And here i thought the only cost involving this model was a sacrifice of margin…

Have any of you Cargurus customers experienced anything similar?

Comment here in the dealer forums