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CarGurus is an online automotive marketplace that connects buyers and sellers of new and used cars. The
company provides the largest car listing marketplace in the United States and also operates in Canada, UK,
Germany, Italy and Spain.
Platform
Levers
Technological
Process power
Powerful learning affect due to disruptions
matured data and ML algorithms Qualitative data points regarding
vehicle
CarMax business model
This model was built around no-haggle pricing, a no-pressure atmosphere in the store, and a large selection of reconditioned,
high-quality cars, which offered customers a certain level of security by providing inspections and warranties
Acquiring cars
01 Acquiring Cars - Most of the cars are acquired through trade ins.
This creates a high-quality inventory. They also acquire cars
through dealership relationships such as with auction houses
Managing inventory
02 All inventory goes through a standardized internal inspection
process. Cars are separated into "CarMax" and "Valuemax“
Operating stores
Management policies guarantee a consistent customer
03 experience across the company and inventory is shared
nationwide
Marketing & selling
Website searching, "no haggle" price policy, and inspection
04 guarantee are the key components of the companies value added
strategy
Services
05 The company differentiates itself from smaller dealers by offering
financing, appraising, repairs, guarantees and warranties for every
sale.
Comparing business models
Asset heavy: CarMax & Carvana carry higher business risk compared to CarGurus
Inventory: In order to mitigate inventory obsolescence risk and increase movement, CarMax
listings tend to cater mass market demand. CarGurus can offer a wider variety across segments.
Offline user experience: CarMax has better control over user interactions at retail outlets.
Promise of good vehicle condition, transparent charges, maintenance support & home delivery
Non-negotiable high prices: CarMax listing carry a premium cost of 3k$-4k$ above the market
price but saves from price haggling. CarGurus typically has better priced listings
Synergies: CarMax model provides opportunities to expand the business across the value chain
into maintenance and repairs due to lower incremental cost of infrastructure and brand value
Financial Performance - CarGurus
EBIDTA: US$
38.8m/yr
EBIDTA: US$
25.9.8m/yr
EBIDTA: US$
17.9.8m/yr
Implementing the business model in India
• The customer perception regarding used
vehicles is positive and the used car market
forecasts good growth C2C Organized
• The bundled SEM model should work in cities
where demand is high
• Cities where the overall demand is less,
unbundled lead generation model should be a
Unorganized Semi-organized
better value proposition
• Possible hurdles: Data procurement
• Opportunity to create organized CPO market
Deloitte, IndiaBluebook
Thank you
Questions?