Cars.com is flashing red, and the auto market may be next
Cars.com (CARS) closed out a difficult year for both its stock price and its core business, even as analysts continue to view the online marketplace as a useful barometer of broader vehicle market conditions — conditions that are increasingly showing signs of strain.
Earlier in December, CNBC’s Brian Sullivan highlighted sharp price cuts on Ford F-150 Lightnings, including models with relatively low mileage.
Because Cars.com is widely used by both buyers and sellers to search inventory, compare pricing, and gauge demand, the growing number of discounted listings points to softening conditions in the electric pickup market more broadly.
Falling prices on late-model vehicles typically reflect excess supply, slower buyer demand, or both. Those dynamics can ripple through dealer profitability and advertising budgets, directly affecting platforms like Cars.com that depend on dealer spending and transaction activity.
The F-150 Lightning is just one of several signs of weakening demand amid persistent affordability pressures, even in the used-vehicle market. That softness appears to be hitting electric vehicles particularly hard, as EVs generally carry higher upfront prices and depend more heavily on incentives than conventional gasoline-powered models.
The weakness was evident in December, when S&P Global Mobility said battery electric vehicles accounted for just 6% of total U.S. vehicle sales.
Against this backdrop, S&P Global Mobility expects U.S. auto sales to fall 2.5% in 2026, to roughly 15.89 million vehicles.
“Unfortunately, the new vehicle affordability issues that have pushed against sustained momentum for U.S. auto sales levels over the past two years remain entrenched,” said Chris Hopson, S&P Global Mobility’s manager of North American light vehicle sales.
Cars.com: modest gains, but growth remains elusive
Cars.com showed signs of improvement in its fiscal third quarter, posting record total revenue of $182 million and positive dealer revenue growth. Profitability was largely in line with expectations, with adjusted earnings of $0.48 per share.
Still, revenue growth remained modest compared with a year earlier. On its own, that wouldn’t necessarily raise alarms, except that Cars.com’s top-line growth has been largely stagnant since around 2023.
That period has coincided with a prolonged stretch of higher interest rates, which has weighed on auto affordability and spilled over into the financing market.
As borrowing costs rise, vehicle demand tends to soften, pressuring dealer volumes and, in turn, limiting growth for online marketplaces like Cars.com that depend on dealer advertising and transaction activity.
CARS stock ended the year at $12.20, down nearly 28% and trading at roughly half its post-pandemic high reached in mid-2023. The company’s market capitalization has fallen to about $730 million.
Over its lifetime as a public company, the stock has delivered a negative total return of roughly 50%, underscoring the persistent challenges it has posed for long-term investors.