February 8, 2022 — Cars.com announced this morning it is acquiring the assets of Accu-Trade, Galves Market Data, and MADE Logistics from founder Robert Hollenshead.
Terms of the transaction, which should close within the next month, include an initial cash payment of $65 million with another expected $63 million earnout payment based on certain financial targets.
The acquisition follows Cars.com’s purchase of CreditIQ, an automotive fintech platform, in early November.
Acquiring Accu-Trade gives Cars.com the ability to provide its dealers with digital vehicle acquisition services, including sourcing vehicles directly from private sellers on the Cars.com platform.
Combined, the three assets provide dealers with real-time, VIN-specific appraisal and valuation data, instant guaranteed offer capabilities, and logistics technology.
“These solutions will drive better inventory management and maximize profits for dealers while introducing a more efficient option for buying and selling wholesale inventory at scale,” Alex Vetter, Chief Executive Officer of Cars.com, said in a press release this morning. “We will also empower millions of consumers to confidently and securely sell their vehicles online to the best buyer.”
The acquisition fits with Vetter’s strategy of finding software solutions that need a large partner to scale while driving profitability to its dealer customers’ bottom line. These solutions can be integrated into the CARS platform which includes the Dealer Inspire websites. Combined, CARS and Dealer Inspire have more than 389 million quarterly visitors on the platform.
Being able to scale new solutions such as CreditIQ and Accu-Trade should drive revenue for CARS over the next couple of years.
Accu-Trade revenue is based on subscription fees of its appraisal and data products to dealers. CARS expects to launch the product across its platform and begin recognizing incremental revenue in the second quarter of 2022.
CARS will provide more information about the purchase on its 2021 annual earnings call scheduled three weeks from now. Its stock price currently is trading above $15 a share, up more than 13% over the last 12 months.
Hollenshead is a longtime industry veteran having started more than 50 years ago. He launched Accu-Trade in 2015, acquired Galves in 2017. He also created the industry’s first “instant cash offer” concept, which is a key part of the Accu-Trade solution.
TrueCar had acquired a 20% stake in Accu-Trade in 2019, but that investment was placed on the backburner once Chip Perry left TrueCar three months later, according to sources familiar with the investment.
The sale to CARS provides Hollenshead with a strong exit and a partner that can scale the business quickly.
Jeff Zamora, Chief Technology Officer of Accu-Trade, will join CARS’ leadership team.
The press release is below:
CARS TO ACQUIRE THE ACCU-TRADE GROUP, ADDS DIGITAL VEHICLE ACQUISITION TO THE CARS PLATFORM
- Acquires powerful data and technology assets that allow dealers to efficiently buy and sell inventory through CARS’ extensive dealer network and tap into CARS’ massive in-market audience, improving dealer inventory turn and maximizing transaction margins
- Enables real-time transparency on vehicle valuation and provides a trusted platform for secure online transactions for dealers and consumers looking to sell to qualified buyers
- Further strengthens end-to-end capabilities on CARS’ platform, driving incremental revenue and ARPD opportunities
CHICAGO, Feb. 8, 2022 – Cars.com Inc. (NYSE: CARS) (“CARS” or the “Company”), a leading automotive marketplace platform that provides a robust set of industry-specific digital solutions, today announced that it has signed an agreement to acquire 100% of the assets of Accu-Trade, Galves Market Data and MADE Logistics (“Accu-Trade”), which includes real-time, VIN-specific appraisal and valuation data, instant guaranteed offer capabilities, and logistics technology. Consideration for the transaction will be $65 million in cash at closing. There is also the potential for additional cash and stock consideration based on achievement of certain financial thresholds. We anticipate making a $63 million earn-out payment, which may be higher or lower based on actual performance. The transaction is expected to close in approximately 30 days.
“We are excited to enter into the rapidly growing multi-billion-dollar digital vehicle acquisition and remarketing category with Accu-Trade’s best-in-class valuation and appraisal technology. These solutions will drive better inventory management and maximize profits for dealers while introducing a more efficient option for buying and selling wholesale inventory at scale. We will also empower millions of consumers to confidently and securely sell their vehicles online to the best buyer,” said Alex Vetter, Chief Executive Officer of CARS. “This acquisition is a further acceleration of our platform strategy and will fuel our end-to-end transaction capabilities for buyers and sellers as well as long-term growth for CARS.”
As a result of the acquisition, the CARS platform will enable dealers to quickly and efficiently buy and sell inventory at scale across a dealer-to-dealer and consumer-to-dealer network, improving inventory turn and maximizing profits per transaction by helping to match each vehicle with the best end-user. Dealers will gain access to an instant guaranteed offer solution across the CARS platform, including on the Cars.com marketplace and Dealer Inspire websites. Using Accu-Trade’s proprietary VIN-specific valuation and appraisal technology, dealers will confidently source inventory directly from the tens of millions of high-intent, in-market shoppers who visit the CARS platform each quarter — 142MM visits at Cars.com and an additional 247MM visits across DI dealer websites.¹
Shoppers will benefit from real-time transparency and consistency about a vehicle’s guaranteed value, instant connection to the best buyer, and a secure option to complete an online transaction. CARS will also launch new sell-it-yourself capabilities on its marketplace, giving the approximately 11MM² annual private-party car sellers in the U.S. the option to sell to another consumer or to one of thousands of certified dealers. Integration of the technology across the CARS platform is expected to begin shortly after the transaction closes.
Accu-Trade generates revenue through subscription fees of its appraisal and data products to dealers. CARS expects to launch the product across its platform and begin recognizing incremental revenue in the second quarter of 2022. We expect the acquisition will be EBITDA accretive in year one. More information will be provided on the future revenue contribution and incremental expenses related to Accu-Trade on CARS’ year-end earnings call.
Accu-Trade was founded in 2015 by automotive industry leader Robert Hollenshead, a leading North American wholesaler and auto software entrepreneur. Jeff Zamora, Chief Technology Officer of Accu-Trade, who will be joining CARS’ leadership team, said, “CARS’ strong consumer audience and an outstanding network of dealer customers, combined with its proven track record of delivering digital solutions, makes it the ideal match to drive wider adoption of the Accu-Trade platform. As dealers look for new solutions to optimize inventories and further drive profitability in their businesses, we believe we can quickly scale these assets across the CARS dealer network. On behalf of the entire Accu-Trade team, we look forward to joining the CARS family to help accelerate innovative digital solutions for the auto retail space.”
¹CARS Internal Data, Q3 2021
²NADA Used Car Data for Private Party Vehicles, Nov. 2021
ABOUT CARS.COM INC.
CARS is a leading automotive marketplace platform that provides a robust set of industry-specific digital solutions that connect car shoppers with sellers. Launched in 1998 with the flagship marketplace Cars.com and headquartered in Chicago, the Company empowers shoppers with the data, resources and digital tools needed to make informed buying decisions and seamlessly connect with automotive retailers. In a rapidly changing market, CARS enables dealerships and OEMs with innovative technical solutions and data-driven intelligence to better reach and influence ready-to-buy shoppers, increase inventory turn and gain market share.
In addition to Cars.com, CARS brands include Dealer Inspire, a technology provider building solutions that future-proof dealerships with more efficient operations and connected digital experiences; FUEL, which gives dealers and OEMs the opportunity to harness the untapped power of digital video by leveraging Cars.com’s pure audience of in-market car shoppers, DealerRater, a leading car dealer review and reputation management platform, and automotive fintech platform CreditIQ.
Accu-Trade provides dealers with vehicle valuation and appraisal technology and connects consumers to the best buyer for their vehicle. The platform is based on VIN-specific historic information and condition. The company’s valuation platform is fueled by market-correct data from Galves, which has been a leading provider of wholesale vehicle auction information since 1957. Galves has been trusted and used by thousands of dealers to buy and sell more vehicles. The company also includes MADE Logistics, an early-stage dealer and wholesaler logistics platform to transport vehicles. For more information, visit www.accu-trade.com.