Naved Khan: Got it. Thank you, guys.
Jason Trevisan: Thanks.
Operator: Our next question is from Kunal Madhukar with UBS. Please proceed.
Kunal Madhukar: Hi, thank you for taking the questions. A couple, if I could. One on the semi car top dealer offer, how does that work technically in the sense? I thought that dealers would enter the prices in the matrix, and that is what would be shown to the consumer. So where does the second offer come in into play? How long does that take? Is that also instant — and if it is, how does that work? And then on this one, is the delta between the two offers, really, the cost of picking up the car? Or is it something else? And then the second one would be on the Car Shed. As we look at next year, how should we think of the evolvement of — or the growth of Car Shed into 2024? Thank you.
Sam Zales: Kunal, thanks. it’s Sam Zales. I’ll start with it, and I’m not sure I heard the second part of the question, but I’ll come back to that in a minute because we really are excited about sell my car top dealer offer. You asked is it an instant offer, it is. And the reason it is, is that the dealer is setting up two matrix offers. They’re setting up an offer for IMCO, which is a vehicle that’s going to be picked up at the consumer and then dropped off. That’s a different experience for them. The second is I have a chance to win that consumer who might want to buy another vehicle. So they’re making an offer for that consumer dropping it directly at the dealership and gives them an opportunity to have a buy-sell opportunity, which is much more lucrative to the dealer.
This is exactly why they came to us and said, “I use some other products in the marketplace. I want to compete for a buy-seller opportunity for that consumer. I will, therefore, pay more for that consumer that comes into the dealership and transacts with us. So you asked about the delta. It has been a terrific delta right now. Not only is it a delta where it’s meaningful and consumers are choosing the drop-off semi car top dealer offer that’s presented at a greater extent than they’re taking IMCO. That’s why we guided to — IMCO will be cannibalized a bit by this product being launched. Number two is the delta is significant versus our competitors in the marketplace. So consumers today can sell to CarMax, Tarvana Point Solutions. When dealers are competing to win this business at the local dealership and a drop-off scenario, we’re winning significantly, and we’ve had great success for consumers and for dealers in this early stage of sell my car.
Sam Zales: I’d wait for — sorry, the second part of the question was, Jason, do you want to take that one?
Jason Trevisan: Yes, I can take it. It’s related to cars next year, so it’s a different topic. So we have not given guidance for Carson next year. The — but I’ll just quickly run through what are the drivers of carsid [ph] and carside is but one factor in dealer growth is the other factor. So new and customers that we’re bringing on for the first time that we’re rewinning at market rates is a significant driver versus those who were legacy customers on at lower rates. — upgrading to new packages is a key driver. We talk about ABRs, and I think they probably get overplayed a bit because they’re one manifestation of us renewing customers. And there are many ways that we renew customers, and ABRs have — are sort of the most extreme of those that are underpriced.
But we are renewing and resigning customers all the time. Other products. So we are adding in and building a broader portfolio of other products like highlight, new car highlight, geographic geo expansion, digital deal. Now you’ve heard us talk about popular offer. So there’s a number of other products. And then we also — you heard us talk about dealer data insights. And so these are features that we don’t charge a la carte for, but there are features that we are confident at value to what our dealers are getting from us. And if we do that successfully and in meaningful enough ways, then we think we’ll have even more success helping dealers realize the value that we’re driving them.
Kunal Madhukar: Thank you so much
Operator: Our next question is from Doug Arthur with Huber Research Partners. Please proceed.
Doug Arthur: Yes, thanks. Jason, I guess, looking at the product side of the business, I mean, what set of circumstances, if you’re predicting price in the wholesale market is likely to decline through the balance of next year, which I think is pretty rational. What set of circumstances is going to jump start this business? And then just sort of a follow-up on this, sell my car cannibalization issue. Are you beginning to look at ways to pivot away from the original IMCO proposition?
Jason Trevisan: Sure. Thanks, Doug. So yes, if the wholesale prices continue to decline, which there’s — I would say that’s the general consensus view. We think — I mean, digital penetration in wholesale is still quite small. And so we know that we have an opportunity for digital to take much more share than it is. The ranges of what digital represents today range from maybe low double digits to 30%-ish. I mean, so there’s still the majority of the market that is offline that we think we can go after. Number two is we do think we’re making these operational and product changes already, which are opening up new customer segments who are historically not going to be an early adopter to buying sight unseen, and they’re now willing to try a product that’s more like a matrix rather than an auction.
The third is as we now are one unified company, 100% together, we are excited about the acceleration of product innovation. And our long-term vision is that we can have full visibility on data and give this to dealers from wholesale all the way to retail and the easiest example of that is we are seeing the retail trends. We can tell a dealer what types of cars they should be sourcing and then we can help them source those exact cars. So — that’s one example from a product and data perspective. Another one is tighter integration on our sales and account management and go-to-market. And so it’s early days in digital adoption. It’s still early days had car offer from a total life of company perspective, it’s still a young business. And now with Zach coming into his role, we have couple of decades of expertise from other digital platforms and wholesale.
So I don’t you said jump start. I mean none of the things that I just said are an overnight thing, but we think it’s setting that business up for a really nice future. In the Instant Max Cash Offer cannibalization point, No, I wouldn’t say we’re pivoting away by any means. I mean I think the whole — our excitement is this concept that we’re offering consumers selection, convenience, price better than anyone else, we think, and this is a great example of that. So most other places where you’re offered to sell your car, it’s either come drop it off or pick it up. And some segments like to have it picked up and are willing to sacrifice some costs for it. Others are going to maximize cost and want to bring it locally. So we’re giving them the selection by having a top dealer offer or the top matrix offer, we’re giving them the price, and then we’re letting them decide which is the convenience.
So — we’re the only offering that in the market that has both like that.
Doug Arthur: Okay. Thank you very much.
Jason Trevisan: You bet.
Operator: Our next question is from Ralph Schackart with William Blair. Please proceed.
Ralph Schackart: Thanks for taking my question. On car offer, Jason, you noted some operational improvements in a prior question. Just curious if you sort of expand on that a little bit and talk or more broadly where you are in that process in terms of making operational improvements? And then now that you’ll own all of car offer, does that significantly increase your ability should you need to make operational improvements or further ones going forward? Does that increase your ability to do that at a much faster rate? Thank you.
