TripAdvisor co-founder Langley Steinert talks to Motor Trader about his ambition to overtake Auto Trader within 12 months with the UK launch of CarGurus
Every now and again the market dominance of Auto Trader is challenged by a new pretender but to date no-one has come close to knocking the giant off its perch. Will that change with the debut of CarGurus in the UK?
Rupert Murdoch’s News UK had a go with Sun Motors and Sunday Times Driving. It failed. For the last 12 months both sites’ listings have been fed by Motors.
The RAC and AA both launched brand extensions which have yet to truly capitalise on their names, especially RAC Motors which will fall short of its ambition to become the market leader by the end of 2015 with 500,000 listings.
That leaves Motors as the number two. As part of the US owned Cox Automotive, which also owns Manheim, it has benefitted from a marketing spend worth £1m a month over the course of 2015.
However, on 1 December a bona fide US giant quietly launched in the UK, after 18 months of development, with nothing less than market domination in its sights. On the face of it CarGurus’ credentials are impressive. It was launched in 2007 by TripAdvisor co-founder Langley Steinert (pictured) as a direct rival to AutoTrader.com – the unrelated Cox Automotive owned US market leader – and now outperforms it with 15.5 million unique monthly visitors.
Steinert is confident this zero to hero success can be replicated in the UK, following its launch in Canada and ahead of tackling other European markets, starting with Germany. The business has a significant cash reserve to finance its growth and he appears nonchalant about when it will make a profit. But, unlike the competition, CarGurus will not be investing in a marketing campaign to promote the business, preferring instead to rely on the strength of the product and the resulting online chatter and recommendations. It’s a high risk strategy dependent on SEO.
It also has a USP adapted from Steinert’s days at TripAdvisor. All customers who transact with a dealer on the site, will be invited to rate them. These ratings will in turn be built into the algorithms which determine the way the search results, which are also based on the best prices, are presented.
So what was the attraction of the mature UK classified market?
“The UK has many of the same dynamics as the US when we first started with an entrenched competitor that has close to a monopoly status. Autotrader.co.uk are a great company doing good things for consumers and dealers but we found in the US when we started that dealers, more than anything, are really looking for a choice when they think about digital marketing.”
Steinert believes his site’s clever algorithms will deliver a new level of transparency which will engage consumers. The experience is certainly user friendly with cars searchable according to geographical location with the best priced ones tagged with the highest rated dealer. The search also reveals days in stock and price changes as well as the current asking price against what the site terms its Instant Market Value.
“We sort the cars based on what is the best economic outcome for the consumer. We think about shopping the same way that Google thinks about web search; first and foremost you need to supply the consumer with the best experience and worry a little bit less about how you make money until a later date. If you build the audience the dealers will want to become part of that audience.”
It sounds vague and there are other points to clarify. For starters dealers are being offered a free upload service to advertise their stock with Steinert sounding relaxed about not seeing a return on his investment in the short to medium term. Also, how has CarGurus launched with 200,000 listings when awareness amongst dealers must be close to zero? When pressed Steinert said it has been supplied by partners who are “inventory syndication companies” and dealer website hosters.
“Our goal in the next six to 12 months is to build the biggest possible audience. We’re not all that focused on signing up dealers and making money, that’s not really our goal. The company in the US is very profitable and can afford to run our UK operation at a significant loss for quite a while and not having to worry about having to sign up dealers to paying revenue relationships. It’s more about getting the traffic, building the audience and worry about how we make money off it later.”
So how big will CarGurus be in 12 months’ time?
“Our goal is to have at least as many listings as Auto Trader. When I started TripAdvisor it was a silly idea on a chalkboard, now it’s a $14bn company, when we started CarGurus we had a similar challenge so I don’t have any reason to believe that we won’t pass Auto Trader here in the UK.”
For dealers the arrival of a new player will be good news, especially one that is no hurry to charge for its services, is a spin-off of a successful US site and has the support of a proven online entrepreneur. The times are indeed changing.
UK Online Classified Listings December 2015
1) Auto Trader…………………………………………… 455,737
3) RAC Cars………………………………………………..317,017
5) AA Cars………………………………………………….167,410
Research conducted by Motor Trader on 1 December 2015.
*Figure supplied by CarGurus