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Article What Happens When You Give Dealers Real Control Over AI? Read More

By: Mark Hollmer

Key Takeaways

  • CarEdge and Car Genius AI are piloting tools that bypass third-party listing sites.
  • The startups challenge the business models of established companies like CarGurus and TrueCar.
  • Experts debate whether AI agents will force listing sites to evolve or disappear.

Dealerships have embraced third-party listings sites since they began revolutionizing online car sales more than 25 years ago. Two artificial intelligence startups are betting they can lure dealers away by eliminating the middleman.

CarEdge and Car Genius AI began pilots this winter that let vehicle buyers and sellers connect directly. Early dealership reaction is positive, the two startups say, challenging the business models of companies such as CarGurus, TrueCar, Cars.com and Autotrader. Third-party listings companies typically make money from fees paid by dealerships, advertising and other services.

“Listings companies have been outdated for a long time,” said CarEdge CEO Zach Shefska.

Not so, said Scott Painter, TrueCar’s CEO.

“Rather than bypassing platforms like ours, AI agents will likely connect to them,” Painter told Automotive News. “Just as travel booking sites didn’t disappear when mobile apps arrived, the underlying marketplace became even more important.”

The current reality may be somewhere in between.

AI agents have a place in vehicle shopping if they shift from listings quantity to better purchasing outcomes, said Inga Maurer, a senior partner at McKinsey & Cos.

Third-party marketplaces can stay relevant by “verifying inventory and pricing, standardizing out-the-door quotes” and bringing dealerships more ready-to-buy customers, Maurer said.

AI agents will reduce demand for third-party listings sites but won’t eliminate them, said Ashley Cavazos, a digital performance consultant with NCM Associates, which offers technology training for dealerships.

“I think we still have a need for them, Cavazos said, “but maybe not as strong as it was before.”

Do AI agents need vehicle listings companies to work well?

Dealerships could achieve substantial savings by bypassing vehicle listings companies, said Joe Lewis, general manager at J.C. Lewis Mazda in Savannah, Ga., who is participating in the CarEdge pilot.In addition to the Mazda store, J.C. Lewis owns a Lincoln dealership and four Ford stores in the metro Savannah area.

“If we didn’t have to spend any money on marketing and lead providers, that opens up a door where we can start to discount cars more and give better deals because we’re not having to spend that money elsewhere,” Lewis said.

Agents, typically built with generative AI, perform independent tasks and communicate like humans.

CarGurus CEO Jason Trevisan said he views AI agents as driving evolution but not extinction.

“Yes, it’s a competitive threat. Every technology is a competitive threat,” Trevisan said. “We are very ‘forward-leaning’ on it.”

A typical franchised dealership spends more than $500,000 annually on advertising, according to NADA’s 2024 annual financial profile of franchised new-car dealerships. Third-party listings sites take up 21 percent of that spend — roughly $114,700, NADA said.

J.C. Lewis Mazda, for example, spends about $13,672 per month on third-party leads, Lewis said. In February, it sold 29 vehicles from those leads, coming out to $471 per car sold.

About 56 percent of industry leads come from third-party sources, said Eleni Johnson, vice president of SmartDigital at J.D. Power.

Twelve percent of consumers now search for vehicles using AI sites, according to Cox Automotive’s 2026 Car Buyer Journey study.

For now, AI appears to help consumers refine where they want to go rather than bypass listings sites, Johnson said.

Responding to the AI vehicle search threat

AI agents already are changing how customers shop for vehicles online, Painter said.

“Over time, consumers will increasingly interact with software agents that can search inventory, compare prices, evaluate financing options and even negotiate on their behalf,” Painter said.

TrueCar’s importance will grow with this trend, he said, because of the dealership data infrastructure the Santa Monica, Calif., company has built.

AI agents are an opportunity for CarGurus to serve customers better, CEO Jason Trevisan told Automotive News. He said the Boston company weaves AI into every product it offers.

“We are offering dealers products that are AI driven, predictive, personalized to them and giving them insights … from thousands of options,” he said.

Autotrader of Atlanta succeeds by offering multiple ways consumers can shop for vehicles, including AI, said Erin Lomax, vice president of operations, consumer marketplaces for corporate parent Cox Automotive.

AI-backed search converts leads at a rate 33 percent higher than traditional web search, Lomax said.

“Early adopters are showing us the future of automotive shopping, where natural language beats dropdown search,” Lomax said.

Edmunds, of Santa Monica, and Cars Commerce, of Chicago (which includes listings site Cars.com) said AI tools are helping to drive customer engagement.

AI enhancements focus on maximizing how Cars Commerce connects with dealerships and customers, said new CEO Tobias Hartmann during the call.

“If ignored, this is an enormous threat,” said Devin Daly, CEO of retail technology company Impel and a TrueCar investor.

The pilot projects

CarEdge’s AI negotiator app represented consumers in nearly 50,000 dealership interactions since its July debut. Building on that success, the company, of Kensington, Md., is piloting a plan to send leads directly to dealerships.

“The [AI] agent will contact multiple dealerships, get you out-the-door price quotes and show you real transparent data,” Shefska said.

Lewis is optimistic the pilot will draw additional customers without third-party sites. If it does, he said he sees “a world where not just us but [other dealers] start to pull back from vehicle listings sites.”

Dealerships pay a monthly fee during the beta testing that Shefska declined to disclose. Consumers pay $49 per month or $99 annually to access its AI agent that helps negotiate car purchases.

Car Genius AI, of San Francisco, launched in October focused on boosting AI search experience on dealership websites. The company’s technology makes it easier for dealerships to connect with AI agents. The pilot, which began in January, involved 35 dealerships.

The technology enables consumers and dealerships to bypass listings companies by aggregating data for quicker “best price” searches, CEO Corey Lydstone said.

Car Genius is finalizing pricing while it is in the pilot stage. Its business model will start with a free entry tier. It will also include usage-based infrastructure fees and recurring monthly software and service fees.

Vinart Dealerships in Allentown, Pa. owns Acura, Honda, Hyundai, Mercedes-Benz and Porsche franchises in four separate locations. The dealership group has been testing the Car Geniustechnology since January, allowing direct communication with customers about vehicle best prices. Early results are promising, said Andrew Wright, a Vinart managing partner.

AI agents will create lasting market if it enables better customer experience and more pricing transparency than listings companies currently offer, he said.

“I do see a day at some point in the future where some of the current players are no longer in existence,” Wright said.