In June, I wrote about the impact of the coronavirus pandemic on vehicle listings sites — namely, how dealerships’ pullback on marketing spending affected those marketplace companies’ bottom lines.
Some dealerships paused or canceled their subscriptions to online shopping sites such as Cars.com, CarGurus and TrueCar starting in March when some states began requiring showrooms to close. The financial toll of the pandemic was still unclear then. The companies said declines in the number of dealerships that subscribe to their listings services continued into the second quarter.
We’re getting a better idea of the second-quarter impact now that the public listings sites are starting to release earnings.
Cars.com was first to report its second-quarter financial results last week. CarGurus and TrueCar will follow this week.
From April through June, Cars.com lost 905 dealership customers from the first quarter, dropping its count to 18,033 franchised and used-only stores. It’s the lowest figure since at least the second quarter of 2019, the company reported, adding that the drop mostly was because of cancellations and fewer sales of its online marketplace product.
CEO Alex Vetter told analysts on a conference call last week that cancellation rates peaked in May, while retention rates improved during the second quarter and into July.
Dealership discounts offered in April, May and June ended as of July 1, Vetter said, “and thus far in July, retention is at or above the rates experienced in the second half of 2019, and in 2020 prior to the pandemic.”
Dealerships generally have been able to resume sales operations, and some have resumed advertising spending they put on hold now that the economy has reopened.
But it’s too soon to say whether the trend will continue for the rest of the year. As Cars.com said last week, a resurgence of COVID-19 cases and uncertainty about the economy make it hard to predict whether dealerships will once again hit pause on marketing.