TrueCar, With Guns To Its Head, Says Uncle. Will Change Business Model

Actually, what is even more perplexing than the gullibility of the consumer is the stupidity of the dealer. There is not a new car dealer in America that could not write an article on how insidious this kind of arrangement is for their investment and future well-being. But no, their competitive juices kick in and they just have to sell one more car than the guy down the street even if they are losing money doing it. If you want proof they know better, look no further than the fact all the pressure on TrueCar is coming from dealer associations within the various states. Why did they choose to take a bite of the apple to begin with? Dealers have spent the last ten years buying Internet "leads" from these fly-by-nighters for around ten-dollars a pop. For that, they got two twelve year old kids with computers, three Wannabes without money or credit, five guys who live a thousand miles away, and one old lady in Florida who can't remember if she wanted a car or not. And people are afraid of negotiations with these guys?

In what other industries do buyers and sellers fixate so much on discounts relative to arbitrary points like invoice and msrp? Does something magical happen if you manage to buy a car below "invoice"? Who cares how much the dealer paid for the car?

Just call me a happy TrueCar user. They saved me $400+/- on a sub-$20K car plus hours of shopping & negotiating. Here's a real-world example of a car I bought 10 days ago through TrueCar. Mazda5 Sport Manual 6-speed (yes, I'm the guy who wants a minivan with a stick); No options or accessories No Trade-In No Financing, Cash Deal MSRP: $19,345 Destination: $795 Total MSRP: $20,140 Invoice: $18,100 Destination: $795 Total Base Cost: $18,895 Other Price Reducers: Factory-to-Buyer incentive: $0 Factory-to-Dealer incentive: $1,000 Holdback: $275 Knowing these figures (Consumer Reports, Edmunds) would have led me to make a first offer of $17,700 (out-the-door including Title, TempTag and all paperwork, but no sales tax in NH) and expect to settle at $18,100+/- after 2 grueling hours of haggling. But with TrueCar, in one hour over 3 email exchanges without leaving my chair I had a commitment for $17,750 out-the-door price, including all paperwork, Title and TempTag fees. The dealer did not have the car I wanted and took 3 business days to do a swap... but I got the exact car I wanted at the exact first-quoted price... a price $400 less than I thought I'd have to pay using my traditional buying methods. I will say that TrueCar's "Best Local Price" varies greatly... my Mazda was under invoice-incentives-holdback, but other makes/models (Jetta Wagon, Elantra Touring) I looked at were not nearly so aggressively-priced. TrueCar quotes do NOT include Doc Fees, Title, TempTags, etc. so that is an additional point of negotiation. It should also be noted that with TrueCar, the dealer also sold a unit investing only in those same 3 emails. TrueCar's efficient selling model offers those who embrace the model the ability to save time and money too... it is really the traditional commissioned salesperson that loses out here; the same way travel agents and stock brokers have been made obsolete by technology facilitating the dealings between buyer and seller. Our easily-bought elected officials will try to maintain the obsolete dealer-franchise selling model that generates huge profits and campaign donations... but they'll ultimately fail. The market always finds its most efficient methods.

....TrueCar better break itself up into 50 little truecars......vehicle sales and taxing transactions, where regulated at all, are under individual state jurisdiction. This newish internet phenomenon is licenced to sell cars in none of these states. All kinds of consumer beefs can, and probably have, resulted from unaccountable middlemen being involved in multi-thousand dollar purchases, with no recourse to local laws for the victims involved.....who said what?, who promised what?,who do I sue?......these questions pop up all the time in transacting car sales. Hard enough to answer in each individual state, but they don't fancy having to call some nebulous ethernet entity to court every time there's an issue. On the other hand, the idea that elected lawmakers would favor a few fat-cat,(notoriously) cheapskate, political donor car dealers over millions of voting car buyers is patently ludicrous. It's not a bad starting point for the more timid buyers, but they're going to have to get more up front about "THIS SERVICE WILL COST YOU, YES YOU, (AT LEAST) $299!"