Digital Automotive Platforms Add Features and Cut Costs Amid Challenges

Digital automotive platforms are adding features and cutting costs as they continue to cope with a challenging economic environment.

CarGurus executives said Tuesday (Nov. 7) during a quarterly earnings call that the online platform for buying and selling vehicles has been making operational enhancements as it aims to return to profitability in a wholesale environment that has been less than favorable. Dealers have been challenged by high interest rates, reduced consumer demand and lower wholesale unit prices.

One solution CarGurus has rolled out is a feature that allows dealers to present two types of offers to consumers who are considering selling their car. One offer includes the dealer picking up the vehicle at the seller’s home, while the other involves the seller taking the car to the dealer, executives said during the call.

This feature provides greater choice and convenience to the consumer and allows the dealer to provide tailored offers — and sell a car to the customer who has just sold their own car.

“Consumers are now getting a second offer, which is a choice: ‘Would you like to drop that off at your local dealership and get a higher price point there?’ While there isn’t the same convenience factor, you get a higher price point,” CarGurus Chief Operating Officer Sam Zales said during the call.

Vroom reported Wednesday (Nov. 8) that it is working toward improving variable and fixed costs per unit. The eCommerce platform for buying and selling used cars has reduced its titling, registration and support costs by 15%, its marketing costs by 13% and its fixed costs by 15%, Vroom CEO Tom Shortt said Wednesday during the company’s quarterly earnings call.

“Our advanced analytics team, functional business teams and tech team continue to build data assets, analytical assets and tech assets that we believe in the long term will provide a competitive advantage across titling and registration, pricing, conversion unit and product margin, and supply chain costs,” Shortt said.

In addition, Vroom’s automotive finance subsidiary, United Auto Credit Corp. (UACC), has made changes to its underwriting criteria in an effort to improve delinquency trends, Shortt said. Over the past two years, UACC has been challenged by high inflation, higher interest rates, degraded credit performance and volatility in used car valuations.

AUTO1 Group , whose digital platform serves the European used car market, reduced its unit cost per delivery in 2023 and aims to benefit from platform network effects by increasing scale in 2024, according to an earnings presentation released Wednesday (Nov. 8).

The firm plans to continue adding drop-off locations, putting them in locations that are convenient for the customer, and has completed the initial phase of the rollout of its refurbishment facilities. It now has a total capacity of 179,900 units, according to the presentation.

During the third quarter, AUTO1 Group achieved positive adjusted EBITDA ahead of its year-end target, the firm said in a Wednesday earnings release .

“Achieving positive adjusted EBITDA is a significant milestone in our development as a profitable growth business,” AUTO1 Group Chief Financial Officer Markus Boser said in the release. “We are well positioned to become the most profitable used car platform by continuing to leverage our scale, unique car trading dataset and ability to innovate.”