Cars.com Inc. (NYSE: CARS) saw its shares trickle down Friday, as the audience-driven technology company empowering automotive, today announced the acquisition of DealerClub), a reputation-based automotive digital wholesale auction. The Company paid approximately $25 million in cash at closing. There is the potential for an additional performance-based consideration of up to $88 million based on achievement of certain financial thresholds. The transaction closed on Thursday.
DealerClub is an emerging, dealer-to-dealer, digital wholesale auction platform that facilitates transparent and efficient transactions between automotive dealers. The company's auction model is built around a reputation-based system – the first in the industry – which promotes trust in transactions, ultimately minimizing arbitration disputes and title issues. DealerClub's commitment to innovation and dealer support aligns with broader trends in the automotive industry towards digitization and optimized inventory management. Serving more than 650 dealer customers with a strong pipeline, the company generates revenue primarily through transaction fees.
"The acquisition of DealerClub is a critical step for Cars Commerce's strategic vision to expand into the wholesale market by catering to the large dealer segment looking to gain operating and financial efficiencies by leveraging technology to trade used vehicles within a trusted network," said Alex Vetter, CEO of Cars Commerce. "By integrating DealerClub's technology onto the Cars Commerce platform, we add transactional dealer-to-dealer wholesale capabilities focused on transparency and digital efficiency, and significantly extend our influence in the wholesale market by giving power and profits back to the retail community."
CARS shares dipped 11 cents to $17.63.
