CarGurus, Inc. (CARG): Business Model Canvas [Dec-2025 Updated]

You're looking at CarGurus, Inc. (CARG) right now, and honestly, the story for late 2025 is all about doubling down on that high-margin Marketplace engine while cleaning up the past. We're talking about a platform serving around 33,095 paying dealers globally, using proprietary AI to give consumers trust through price transparency, which helps automate things like 80% of managed leads. Still, you can't ignore the transition; they are managing the wind-down of CarOffer, which carries a restructuring hit between $14 million to $19 million. But the core is strong, projecting Marketplace revenue between $902 million to $907 million for FY 2025, so you need to see exactly how the key activities and resources support that revenue before making your next move.

CarGurus, Inc. (CARG) - Canvas Business Model: Key Partnerships

The strength of CarGurus, Inc.'s model relies heavily on its network of external relationships, which feed its marketplace and intelligence offerings.

AutoCanada multi-year deal as preferred digital partner in Canada

CarGurus, Inc. secured a long-term relationship designating it as the preferred partner for AutoCanada Inc. in Canada, effective July 2025. This partnership grants AutoCanada access to CarGurus, Inc.'s listings marketplace, digital marketing, retail solutions, and market intelligence. AutoCanada operates 64 franchised dealerships and three used car dealerships across Canada, all included in this strategic agreement.

Thousands of franchised and independent auto dealerships globally

The scale of CarGurus, Inc.'s dealer network is a core asset, driving network effects for both consumers and dealers. As of the end of the third quarter of fiscal year 2025, CarGurus, Inc. served 33,673 Global Paying Dealers. This represented growth of 1,989 net new dealers globally year-over-year for the third quarter of 2025. The company continues to expand its international footprint, with International CarSID increasing 15% year-over-year and adding 807 net new dealers in Q3 2025.

You can see the geographic breakdown of dealer growth below:

Data providers for proprietary pricing and inventory feeds

CarGurus, Inc. translates data from billions of monthly site interactions to power its intelligence platform. This data forms the foundation for dealer tools that offer predictive analytics. For example, during the third quarter of 2025, dealers utilized the Next Best Deal Rating tool to execute over 700,000 price changes. The adoption of dealer data insights products is significant, with 9,791 dealers using the Merchandising insights product and 5,032 dealers using the Max margin insights product by the end of Q3 2025.

Key data-driven activities include:

• Next Best Deal Rating used by nearly 20,000 dealers.
• PriceVantage, a machine learning-based pricing solution, is powered by real-time consumer demand data.
• Data is used consultatively to demonstrate return on investment and share market trend insights.

Technology partners for cloud infrastructure and AI development

While specific external cloud infrastructure providers aren't detailed, CarGurus, Inc. emphasizes its internal technology stack that supports data gathering and AI development. Salesforce is the primary tool used for gathering data, visibility into revenue, and spotting trends. This is complemented by insights from Dialpad, the company's phone system, which integrates with other tools to surface themes from customer calls for product development. The company is heavily focused on integrating AI across its offerings, such as the generative AI-powered shopping assistant, CG Discover, which saw leads grow 3.3X quarter-over-quarter in Q3 2025.

CarGurus, Inc. (CARG) - Canvas Business Model: Key Activities

Developing AI-powered dealer software (e.g., PriceVantage)

The focus here is on scaling intelligence tools that move CarGurus beyond just a marketplace, targeting the $4 billion U.S. dealer software and data market segment.

AI tools are handling nearly 80% of managed chats, which supported a 40% cut in the outsourced engagement team.

Operating and maintaining the high-traffic online marketplace

The core Marketplace business showed strong operating leverage through Q3 2025, driven by dealer upgrades and higher spend per dealer. The company is focusing guidance on this segment now that the wholesale business is sunsetting.

• Marketplace Revenue (Q3 2025): $231.7 million, up 14% year-over-year.
• Marketplace Adjusted EBITDA (Q3 2025): $82.4 million, up 18% year-over-year.
• Marketplace Adjusted EBITDA Margin (Q3 2025): 36%, an improvement of about 120 basis points year-over-year.
• Total Paying Dealers (Q3 2025): 33,673, a 6% increase year-over-year.
• Quarterly Average Revenue per Subscribing Dealer (QARSD) (Q3 2025): $6,492, an increase of 8% year-over-year.
• U.S. Net New Paying Dealers (Q3 2025): 1,182, marking the seventh successive quarter of positive net additions.

Performance marketing to drive high-intent consumer traffic

CarGurus continues to emphasize the Return on Investment (ROI) advantage for dealers, which reinforces competitive positioning and wallet share consolidation.

The company guided for sequentially higher investments in sales and marketing during the third quarter of 2025.

OEM Advertising revenue showed double-digit year-over-year growth in the fourth quarter of 2024.

Managing the wind-down of the CarOffer wholesale transaction business

The decision was made in August 2025 to wind down the CarOffer transactions business, with substantial completion expected in the second half of 2025. The company expects to recast this segment as discontinued operations in the fourth quarter of 2025.

Total expected expenditures for the wind-down are in the range of approximately $14.0 million to $19.0 million. The total wind-down related charges were updated to be between $13 million to $15 million as of the Q3 2025 call.

• Wholesale Revenue (Q3 2025): Approximately $2 million, down 81% year-over-year.
• Digital Wholesale Adjusted EBITDA Loss (Q3 2025): Approximately $4 million.
• Q2 2025 Impairment Charges related to CarOffer: $32.6 million.

Expanding international dealer base in the U.K. and Canada

International operations sustained outstanding revenue growth, driven by dealer additions and product adoption in both the U.K. and Canada.

International Revenue Growth (Q3 2025): Surged 27% year-over-year.

International CarSID (Q3 2025): Increased 15% year-over-year, adding 807 net new dealers.

In Canada, CarGurus secured a multi-year deal making it the preferred digital retail and listings partner for AutoCanada, one of the country's largest multi-location dealership groups.

The U.K. market saw brand traction, evidenced by being the number one most downloaded automotive app in Q2 2025.

CarGurus, Inc. (CARG) - Canvas Business Model: Key Resources

You're looking at the core assets that power CarGurus, Inc. as of late 2025. These aren't just line items on a balance sheet; they are the engine driving their marketplace advantage, especially as they pivot further into software and data services.

Proprietary data and pricing algorithms (Instant Market Value)

The Instant Market Value (IMV) is central to the CarGurus value proposition, providing shoppers with pricing confidence. This proprietary system is calculated and updated daily using a complex algorithm that incorporates over 5,000,000 data points, including make, model, trim, and vehicle history. This data-driven approach is so critical that 80% of CarGurus shoppers report they won't buy a car without the transparent pricing information the IMV provides.

The application of this intelligence extends to dealer tools, such as the AI-powered PriceVantage tool. Early results from beta dealers using this tool showed a 5x improvement in inventory turn time. Furthermore, the company has been using machine learning since the initial IMV release in 2010.

Large, engaged consumer audience (most visited U.S. auto platform)

CarGurus maintains its position as the No. 1 visited digital auto platform for shopping, buying, and selling new and used vehicles in the U.S. The scale of this audience is substantial, with the website recording 38.98M visits in October 2025. By March 2025, the monthly true audience surpassed 10M, and the website alone saw over 89M unique visits.

Mobile engagement is also strong, with the CarGurus app reaching over 2.1M monthly active users by March 2025. This engagement is deepened by technology, as session times on the platform reportedly surpass competitors by 75%, partly due to AI integration. To capture this audience, CarGurus increased its monthly advertising spend past $1.6M in January 2025, achieving over 100M impressions. Consumers on the platform show high receptivity to the technology, with 88% of CarGurus users described as AI-open.

Global network of approximately 33,095 paying dealers

The dealer network is a direct revenue source and a key indicator of platform value. While the prompt mentions a specific number, the latest figures show continued growth across the global footprint.

The company is focused on increasing monetization from this base, with Average Revenue Per User (ARPU) growth averaging 11.3% over the last two years.

AI/Machine Learning technology and engineering talent

CarGurus treats its technology and talent as foundational, having established its data science team back in 2010. The company formalized its focus by establishing the AI Forward team in 2024 to drive enterprise-wide AI adoption. Now, in 2025, the company has rolled out access to an LLM (Large Language Model) for its entire workforce.

This investment is yielding operational efficiencies; AI tools are now handling nearly 80% of managed chats, which supported a 40% cut in the outsourced engagement team. Strategically, the company is using this technology to expand its scope beyond lead generation, targeting an additional $4 billion market for dealer software, data products, and workflow solutions.

Finance: draft Q4 2025 cash flow forecast incorporating the final wind-down charges for CarOffer by next Tuesday.

CarGurus, Inc. (CARG) - Canvas Business Model: Value Propositions

For Consumers: Price transparency and trust via data-driven rankings

Comfort with online car shopping is at an all-time high, with 83% of consumers preferring to do more of the process from home, an increase from 72% in 2022. Still, 86% of consumers choose to see the vehicle in person before buying. CarGurus is the #1 most visited automotive shopping site in the U.S. Consumers spend 74% more total minutes on the CarGurus site than their closest competitor. Furthermore, 47% of monthly unique visitors do not visit competitor sites. Shoppers are casting a wider net, with 53% considering three or more brands in 2025, up from 43% in 2024. In 2025, 61% of respondents visited two or more dealerships, compared to 54% in 2024. 80% of consumers are open to using Artificial Intelligence (AI), and 26% already use it.

For Consumers: Seamless online-to-offline transaction enablement (Digital Deal)

Digital Deal adoption surpassed 12,500 dealers in the third quarter of 2025, with over 1 million listings digitally enabled. This progress drove 45% year-over-year growth in high-value actions, such as financing applications, appointment scheduling, and deposits. Users who complete these high-value actions close at up to a 3x higher rate than standard e-mail leads. For comparison, appointments were up approximately 20% year-over-year as of Q2 2025. Reservations, the strongest action, close at nearly 16x the rate of standard leads for out-of-market shoppers and 9x for in-market shoppers (Q2 2025 data). Traffic to CG Discover nearly tripled quarter-over-quarter in Q3 2025, and its VDP to lead conversion is 6,000 basis points higher than standard VDP to lead conversion.

For Dealers: High-quality, high-intent consumer leads

The core Marketplace business delivered 14% year-over-year Marketplace revenue growth in Q3 2025, reaching $232 million. This growth reflects higher lead quality and dealer upgrades. Marketplace Adjusted EBITDA for Q3 2025 was $82.4 million, an 18% increase year-over-year. Total paying dealers grew 6% year-over-year to 33,673 in Q3 2025, with international dealers growing 11%. Monetization improved as Quarterly Average Revenue per Subscribing Dealer (QARSD) in the U.S. grew 8% year-over-year in Q3 2025. International CarSID increased 15% year-over-year in the same period. The company is advancing its platform to capture an additional $4 billion U.S. dealer spend on software and data products beyond the current $3.5 billion spent on marketplaces.

For Dealers: AI-powered inventory and pricing intelligence tools

CarGurus, Inc. is deepening dealer workflow integration with its data and software products. The adoption rates for these tools in Q3 2025 were substantial:

Dealers using Next Best Deal Rating made over 700,000 price changes in Q3 2025 alone. Beta results for the new PriceVantage tool showed engaged dealers achieving 5x faster vehicle turn times. Furthermore, 80% of managed leads in October were handled by AI, which reduced outsourced teams by 40%, while engineering productivity rose 25% via AI tools.

CarGurus, Inc. (CARG) - Canvas Business Model: Customer Relationships

You're looking at how CarGurus, Inc. builds and maintains its connections with both consumers and its essential dealer partners as of late 2025. It's a mix of high-tech automation and dedicated human support, all fueled by data.

Automated, self-service tools for consumer car search and research

The relationship here is heavily weighted toward self-service, letting the consumer drive the research phase. Research shows that 80% of consumers are open to using AI in their car buying journey. This openness supports tools like CG Discover, where traffic has nearly tripled quarter-over-quarter, and the leads generated have grown 3.3x. Comfort with online car shopping is at an all-time high, sitting at 83% of consumers preferring to do more from home, which is up from 72% in 2022. Still, the in-person element remains crucial, as most buyers (86%) still choose to see the vehicle in person before finalizing the purchase. The platform's AI-powered search experience, launched in 2025, moves beyond basic filtering to conversational search, helping users find vehicles using natural language prompts.

Dedicated sales and support teams for dealer subscription management

For the dealers, the relationship is managed by dedicated teams focused on subscription success and product adoption. As of September 30, 2025, CarGurus, Inc. served 33,673 Global Paying Dealers. The Quarterly Average Revenue Per Subscribing Dealer (QARSD) stood at $6,492 as of that same date. The international segment shows strong relationship growth, with the UK and Canada marketplaces expanding faster than the U.S. business. For instance, the International CarSID metric increased 15% year-over-year, adding 807 net new dealers in Q3 2025 alone. This growth is supported by the fact that the U.S. business added 1,182 net new paying U.S. dealers in Q3 2025, marking the seventh successive quarter of positive net dealer additions.

Data-driven product adoption and training for dealer efficiency

The connection deepens through the adoption of proprietary, data-driven tools that promise a measurable return on investment for dealers. Digital Deal adoption surpassed 12,500 dealers in Q3 2025, with over 1 million listings digitally enabled, driving a 45% year-over-year growth in high-value actions like financing applications and appointments. The AI-powered Next Best Deal Rating tool is now used by nearly 20,000 dealers, which is a 70%+ increase year-over-year. This tool directly impacts dealer workflow, driving almost 700,000 dealer-initiated price changes in the quarter. When dealers use these recommendations, inventory turns faster, and leads generated through the CG Discover experience show conversion rates 6,000 basis points higher than standard VDPs. Honestly, the integration is getting deep; over two-thirds of recommendations sent to dealers are being opened.

Here's a quick look at the scale of dealer engagement with key data intelligence products as of late 2025:

AI-powered virtual assistants handling 80% of managed leads

Automation is a core component of managing high-volume consumer interactions, freeing up dealer and internal resources. In October 2025, nearly 80% of managed leads, which includes chat and text interactions, were handled and closed entirely by AI. This level of automation has enabled CarGurus, Inc. to reduce its outsourced team by over 40%, realizing meaningful efficiency gains. Internally, the commitment to AI is clear, with 91% of employees reporting weekly AI usage to drive faster execution and sharper insights across functions. This internal adoption also translates to engineering productivity rising by nearly 25% in the past year through AI coding tools.

CarGurus, Inc. (CARG) - Canvas Business Model: Channels

You're mapping out how CarGurus, Inc. gets its value proposition in front of dealers and consumers as of late 2025. It's a multi-pronged digital approach, heavy on owned platforms and data-driven dealer engagement. Honestly, the numbers show a clear focus on deepening monetization within the existing dealer base while still driving top-of-funnel traffic.

CarGurus.com website and mobile app (U.S., Canada, U.K.)

The digital storefronts are the core. CarGurus, Inc. maintains its position as the No. 1 visited automotive shopping site in the U.S.. Traffic data from October 2025 shows the website pulled in 38.98M total visits. You can see the mobile-first reality, as 70.24% of those visits came from mobile devices. By March 2025, the overall monthly true audience had surpassed 10M individuals. The mobile app is growing its footprint, hitting over 2.1M monthly active users by March 2025. To keep shoppers engaged, AI tools are being pushed hard; for instance, the CG Discover (GenAI shopping assistant) saw traffic nearly triple quarter-over-quarter in Q3 2025, with leads rising 3.3x. Still, the in-person element remains key; 86% of consumers still choose to see the vehicle in person before buying.

Here are some key digital engagement and marketing spend figures:

• October 2025: Organic website visits totaled 12.34M.
• October 2025: Paid Search contributed 645.5K visits.
• January 2025: Monthly advertising spend exceeded $1.6M, achieving over 100M impressions.
• Q3 2025: 56% of consumers engaged with the Dealership Mode feature.
• October 2025: The global ranking improved to 870 from 890 over the last three months.

Owned international marketplace brands (e.g., PistonHeads)

The international push is showing up in the financials, which is great to see. International revenue surged 27% year-over-year in Q3 2025. This growth is supported by dealer expansion; International CarSID (Consumer Shopping Intent Data) grew 15% year-over-year in Q3 2025, with 807 net new dealers added globally. Back in Q1 2025, the international revenue growth was reported at 20% year-over-year. In the U.K. specifically, CarGurus ranked first in ROI among surveyed dealers in Q1 2025.

Direct sales force for dealer subscription acquisition

The sales force and platform value drive the subscription side, which is the engine for high-margin revenue. The total global paying dealer count reached 33,673 in Q3 2025, a 6% year-over-year increase. For the U.S. specifically, 1,182 net new paying dealers were added year-over-year in Q1 2025. Monetization per dealer is also climbing, which is a strong indicator of platform value; the global Quarterly Average Revenue per Subscribing Dealer (QARSD) was $9,442 in Q1 2025. The company also noted that over 17,000 dealers globally now use the Next Best Deal Rating tool as of Q1 2025.

Here's a quick look at the dealer base and monetization:

Search Engine Optimization (SEO) and Search Engine Marketing (SEM)

SEO and SEM are the primary fuel for driving traffic to the owned digital properties. In October 2025, organic search accounted for 12.34M visits to cargurus.com. Paid search contributed 645.5K visits in the same month. Overall, 21.81% of traffic in October 2025 came from Search Engines, a channel that requires constant investment to maintain visibility. You saw that investment in action when monthly advertising spend exceeded $1.6M in January 2025.

Finance: draft 13-week cash view by Friday.

CarGurus, Inc. (CARG) - Canvas Business Model: Customer Segments

You're looking at the core groups CarGurus, Inc. (CARG) serves as of late 2025. It's a dual focus: powering dealer operations while capturing distinct consumer needs across the price spectrum.

The dealer segment is the backbone, and the numbers show sustained growth in their adoption of CarGurus, Inc.'s data tools across the U.S. and international markets.

The consumer side shows a clear split driven by economic realities, which CarGurus, Inc. captures through its search and listing data.

• Franchised and independent auto dealerships operate across the U.S., Canada, and the U.K., with CarGurus, Inc. operating marketplaces under its own brand, plus Autolist (U.S.) and PistonHeads (U.K.).
• The U.S. Quarterly Average Revenue per Subscribing Dealer (QARSD) was $7,337 in Q4 2024.
• Overall Quarterly Average Revenue per Subscribing Dealer (QARSD) increased to $6,492 in Q3 2025.

For the value-focused used car buyers, affordability is the main driver, pushing them toward older inventory.

• Most used retail sales growth so far in 2025 has been in vehicles priced under $30,000.
• This segment under $30,000 accounted for roughly 73% of the year-over-year increase in used sales in 2025.
• Listings for new vehicles priced below $30,000 have dropped by 18.7% since late March 2025.
• In 2024, searches for used cars under $10,000 were up 20.5% year-over-year on the site.

Conversely, the affluent segment is driving growth at the top end of the market, often seeking new luxury models.

• Luxury buyers helped fuel growth at the top of the market.
• Nearly half of new luxury growth year-over-year fell in the $70,000 to $90,000 range.
• New car searches over $50,000 increased by 13.4% year-over-year in Q1 2024.

Private party sellers use the Sell My Car feature, which is increasingly integrated with the dealer inventory pipeline.

• In 2025, over 80% of sellers finished their transaction process in under a month.
• In 2024, 87% of sellers were open to selling completely online.
• A growing share of vehicles acquired via the 'Sell My Car' process are listed on the CarGurus, Inc. Marketplace soon after purchase.

Finance: draft 13-week cash view by Friday.

CarGurus, Inc. (CARG) - Canvas Business Model: Cost Structure

You're looking at the hard numbers that drive CarGurus, Inc.'s operational spending as of late 2025. It's all about where the cash is going to fuel the core Marketplace business and manage strategic shifts.

Technology and development costs for AI and platform innovation

CarGurus, Inc. is pouring resources into its platform, especially around artificial intelligence. This investment is showing up in operational metrics, suggesting a shift in how engineering time is spent. For instance, as of October 2025, 80% of managed leads were handled and closed by AI, including chat and text interactions. This AI adoption has reportedly improved engineering productivity by nearly 25% over the past year. Management noted that sequential declines in Marketplace adjusted EBITDA margin were partly due to investments in new product innovation. Earlier in 2025, the company projected modest operating expense increases over the year to cover these investments in product innovation and international expansion.

Sales and marketing expenses to drive consumer traffic

Driving consumer traffic remains a significant cost component. The sequential decline in Marketplace adjusted EBITDA margin in Q3 2025 was also attributed to sequentially higher sales and marketing expense. Earlier in the year, for Q1 2025, guidance included plans to ramp media spend, which involved the launch of the 'Big Deal' brand campaign. The assumptions built into the full-year 2025 guidance regarding the pace of paid dealer acquisition are based on recent market trends.

Personnel costs for engineering and sales teams

While a specific line item for total personnel costs isn't explicitly broken out for the full year 2025 in the latest reports, we can look at related operating expenses. For the first quarter ended March 31, 2025, total Operating Expenses were reported at $154.0 million. This figure reflects the cost base supporting the engineering, sales, and other teams. As of September 2025, the company's Current Accrued Expense, which includes compensation accruals, stood at $22.2 Million.

Restructuring charges from CarOffer wind-down

The wind-down of the CarOffer transactions business is a material, one-time cost event. CarGurus, Inc. initially expected total wind-down related charges in the range of $14 million to $19 million. However, by the Q3 2025 earnings call, management narrowed this expectation. The total expected wind-down related charges were revised down to a range of $13 million to $15 million. During the third quarter of 2025, the company incurred $3.8 million in one-time cash restructuring charges related to this wind-down. The initial breakdown of the original range suggested approximately $5 million to $7 million was for onetime restructuring costs, another $8 million to $10 million for wind-down operations, and the final $1 million to $2 million in noncash charges. The company expected to substantially complete the wind-down by year-end 2025.

Here's a quick look at some of the key expense and cost-related figures we have for 2025:

The cost structure reflects a heavy reliance on funding technology development and marketing to support the core Marketplace business, while simultaneously absorbing significant, non-recurring costs from the CarOffer exit.

• AI adoption: 91% of employees use AI weekly.
• AI lead closure rate: 80% of managed leads in October handled by AI.
• Engineering productivity improvement from AI: nearly 25% over the past year.
• U.S. Paying Dealers: 25,153 as of March 31, 2025.
• International Paying Dealers: 7,219 as of March 31, 2025.

CarGurus, Inc. (CARG) - Canvas Business Model: Revenue Streams

The primary revenue engine for CarGurus, Inc. is its Marketplace segment, which is heavily reliant on dealer subscriptions and associated value-added services.

Subscription-based listings revenue from dealers (Marketplace segment) is the core driver of the business's financial health, especially following the wind-down of the Digital Wholesale segment.

• Marketplace revenue for the third quarter of 2025 was $232 million, representing a 14% year-over-year increase.
• Marketplace revenue growth in Q3 2025 was explicitly driven by strength in subscription-based listings revenue.
• U.S. Quarterly Average Revenue Per Subscribing Dealer (QARSD) grew 8% year-over-year in the third quarter of 2025.
• The consolidated Quarterly Average Revenue Per Subscribing Dealer (QARSD) hit $65,000, up 8% year-over-year.
• The company added 1,182 net new paying U.S. dealers year-over-year in Q3 2025, marking the fourth straight quarter of accelerating year-over-year dealer count growth.

Revenue from digital retail solutions and add-on dealer products is increasingly important as CarGurus leverages technology to deepen dealer engagement beyond basic listings.

• Digital Deal adoption surpassed 12,500 dealers with over 1 million enabled listings.
• Digital Deal adoption drove 45% year-over-year growth in high-value actions like financing applications and appointments.
• International revenue rose 20% year-over-year in Q1 2025, with strong lead growth in Canada and the UK.

Data and software product fees for dealer workflow tools represent the expansion of the value proposition, moving toward a software-driven model.

Projected FY 2025 Marketplace revenue of $902 million to $907 million is the key forward-looking metric, reflecting growth of between 13% and 14% year-over-year.