- What is Cars.com, and how does Cars.com work?
- How does Cars.com make money?
- Car Dealership Revenue
- Advertising Revenue
- Other Revenue (Selling data)
- Cars.com’s Subsidiaries, Acquisitions, and Exits
- Cars.com’s profit and revenue
- What is the Cars.com business and revenue model?
- Cars.com’s funding and market cap
How does Cars.com make money if it’s free to use? Here is a full, in-depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the Cars.com business model, their profit and revenue, and how Cars.com works.
What is Cars.com, and how does Cars.com work?
Cars.com is an online automotive marketplace that connects buyers and sellers
Since that time, Cars.com now has over 19,179 dealer customers across all 50 states on the platform and attract more than 25,064,000 monthly visitors to their site as of December 31, 2021.
How Cars.com works is: Buyers can browse through vehicles they are looking for by using the marketplaces’ search filter located on the homepage to run a custom search. Once they find a vehicle(s) they are interested in, they can simply message the dealership on the listings page to check availability and set an appointment to see the car.
How does Cars.com make money?
According to page 2 of Cars.com’s 2021 Form 10-K, the company had 19,179 dealer customers and 25,064,000 average monthly unique visitors to their website, as of December 31, 2021.
So how does Cars.com make money off of all those active dealers and site traffic?
Below is a breakdown of how much money Cars.com makes and its revenue model. Including all revenue streams and how much they charge for their services.
Here are the 3 ways of how Cars.com makes money (in 2022):
Cars.com has a revenue model that makes money in three (3) ways – car dealerships, advertising, and other revenue (selling data).
#1. Car Dealership Revenue
Cars.com makes the majority of its money from car dealerships on the marketplace. In fact, $550 million or 88.2% of Cars.com’s total revenue came from car dealerships in 2021.
So, how does Cars.com make money from its 19,179+ car dealers? By selling them marketplace subscriptions and digital solutions.
According to Cars.com, the large majority of their car dealer customers are “car sellers advertising through [Cars.com’s] marketplace subscription products.” Which also include both franchise and independent dealers with digital and physical stores.
And although Cars.com does not disclose dealer subscription pricing, we can see from their 2021 Form 10-K that the monthly Average Revenue Per Dealer (“ARPD”) was $2,333 in 2021.
Note: Cars.com has over 19,179 car dealership customers as of December 31, 2021.
#2. Advertising Revenue
In addition to car dealership revenue, Cars.com also makes its money through advertising. Which added an additional $65.085 million in revenue for Cars.com, or 10.4% of their total revenue in 2021.
Advertising revenue, according to page 23 of Cars.com’s 2021 Form 10-K, consists of “display advertising and other solutions sold to OEMs, advertising agencies, and automotive dealer customers.”
#3. Other Revenue (Selling data)
Cars.com makes the remaining portion of its money from “Other Revenue,” as the company describes it. Which totaled $8.675 million, accounting for the remaining 1.4% of Cars.com’s total revenue.
The company describes this revenue as “revenue related to vehicle listing data sold to third parties and peer-to-peer vehicle advertising,” as noted on page 28 of Cars.com’s 2021 Form 10-K.
Note: Buying, selling, or trading data with any third pary in business is known as a Data as a Service (DaaS) business model.
Cars.com’s Subsidiaries, Acquisitions, and Exits
Aside from Cars.com being acquired by Gannett for $1.8 billion, Cars.com has had its own fair share of acquisitions as well.
To date, Cars.com Inc. has made a total of 6 acquisitions, 1 investment, and 1 lead investment.
Cars.com’s profit and revenue
In 2021, Cars.com reported $623.683 million in revenue.
Note: Because Cars.com Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Cars.com’s publicly released financial reports, including annual reports, through Cars.com’s investor section on their website.
What is the Cars.com business and revenue model?
Cars.com makes money through a few revenue models that they combine within their company, they are:
- Fee-for-service (FFS) business model
- Advertising based business model
- Data as a service (DaaS) business model
- B2B2C (partnerships) business model
- Mergers & acquisitions (M&A) business model
Cars.com’s funding and market cap
Cars.com has a market cap of $1.10 billion as of March 2022.
Cars.com was acquired by Gannett Co., Inc. for $1.8 billion on Aug 5, 2014.