Edmunds.com Acquires CarCode to Help Further its Mobile Strategy

Car-shopping website Edmunds.com announced this week that it has acquired CarCode, an app maker based in Seattle and Ann Arbor, MI. The terms of the deal were not disclosed.

“It’s a great company to be joining,” says Nick Gorton, CarCode’s co-founder.

Even though we’re living in an age of ubiquitous smartphones and Edmunds saw a 39 percent increase in its number of mobile users in 2014, there is currently no good way for a person interested in buying a car to text a dealership. (CarCode’s co-founder Steve Schwartz laid the problem out for Xconomy when we first profiled the company in March: “Do [dealerships] buy a cell phone and leave it in the sales office? Give out the sales manager’s cell phone number? What happens when that sales manager leaves for a new job?”)

CarCode SMS gives dealerships a local number to use for texting. When texts come in, they are read by the CarCode software and assigned to salespeople, who can then respond through the app while the customer is sending and receiving texts normally. The calls can be assigned to specific salespeople in order, or round-robin style. CarCode software also detects key words and integrates them into the dealership’s customer relationship management system.

CarCode originally developed the app as part of a hackathon sponsored by Edmunds earlier this year. The three-year-old CarCode already had developed an app that helped salespeople working at dealerships retrieve information on the spot about the cars they were selling. CarCode ended up winning the hackathon, which led to a dramatic increase in dealerships reaching out to the company to express interest in its products.

“After that, we got a follow-up call from Edmunds asking if we wanted to participate in their Fastlane Accelerator program in Los Angeles,” Gorton says. Unlike many accelerators, Fastlane doesn’t demand equity from participating startups, so CarCode jumped at the chance to “leverage Edmunds’ vast resources” and further develop CarCode SMS. “They have so many people visiting the site from their mobile devices—it allowed us to do more formal testing. At the end of the accelerator, they wanted to continue the relationship. We discussed a licensing deal, but they saw a strategic advantage in acquiring CarCode.”

“We believe mobile is the future,” Edmunds president Seth Berkowitz says. “Thirty percent of our traffic and 40 percent of our page views come from mobile. Offering dealers and customers the ability to text with one another doesn’t exist now, and we think it will be central to how American customers shop for cars in the future. We’re delighted that CarCode was out there innovating and was open to becoming part of our team.”

As part of the acquisition, Gorton will go to work for Edmunds, and co-founders Schwartz and Prabode Weebadde will go back to working at the software development companies they founded. (Schwartz’s is called Alfa Jango and Weebadde’s is called Venturit.)

“For us, it’s very exciting to see our vision at scale,” Gorton adds. “Edmunds is offering it free to their customers, and the response has been overwhelming. They’re getting sign-ups literally by the minute.”

Sarah Schmid Stevenson is the editor of Xconomy Detroit/Ann Arbor. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET_AA

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