CarOffer, an online vehicle wholesaler majority owned by CarGurus, has announced that it has beefed up vehicle inspections to provide dealers with a service that’s “transparent, consistent and reliable.”
CarOffer said these improvements ensure “comprehensive pre-purchase inspections” by third-party technicians. These inspection reports give dealers a detailed evaluation of vehicle condition, including mechanical and electrical inspections, vehicle frame and engine analysis, detailed photos of any potential concerns and a road-test report, the company said.
“Our priority at CarOffer is to fuel the success of our dealer partners by providing them the tools to best navigate whatever market conditions may arise,” CarOffer executive vice president of operations and product strategy Nick Gerlach said in an announcement.
“In the face of continued tight inventory, dealers must be more stringent than ever when sourcing vehicles to ensure they’re making a high quality, profitable investment,” he added. “As a result, we have doubled down on our inspection process … .”
CarGurus acquired a 51% stake in CarOffer in early 2021, when dealers were making huge profits on used-car sales but struggling to acquire inventory.
As the market has turned in favor of consumers over recent quarters, CarOffer has fared less well.
In Q3 2022, CarGurus’ revenue disappointed Wall Street and fell short of its own forecast due to a drastic drop in sales at CarOffer.
CarGurus blamed this on market conditions that made dealers fussier about the vehicles they were acquiring. But it also acknowledged a lax inspection process that sometimes led to unpleasant surprises when CarOffer delivered vehicles.
“We were a little too lenient on that front, quite honestly,” CarGurus chief operations officer Sam Zales said during the company’s Q3 2022 call with analysts. “We try to serve every customer and make them satisfied and that leads to transactions that lose money.”
The company also said that CarOffer’s Instant Max Cash Offer business, which allows individuals to sell cars to dealers through a quick, online process, was yielding subpar inventory. As a result, CarGurus has stopped marketing the product while it works on inspections.
“If older vehicles are coming through from consumers, you have got to have those more rigorous inspections,” Zales said.