TrueCar's Troubles Could Change The Way We Shop For Cars: Back To The Past
First it was Honda that had issues with TrueCar. Now, it is regulators in several states, along with dealer associations that claim that TrueCar’s business model is at odds with “long-standing state laws designed to protect the interests of car dealers and shoppers,” as Automotive News [sub] reports. Says AN:
“Regulators in Colorado, Wisconsin and Virginia have issued bulletins to dealers or sent letters to TrueCar concluding that legal problems exist with TrueCar’s business model of charging dealers for leads that turn into a sale. And dealer associations in three more states — California, Kansas and Ohio — say members who use TrueCar may be violating state law.”
This looks like an opening volley of an all-out war.
What seems to be at issue here is that TrueCar dealers collide with state laws governing advertising and so-called bird-dogging, or paying a third party a fee that is contingent on a sale, as state regulators and associations claim. Dealers could have to pay hefty penalties, and TrueCar’s business model would be destroyed.
The troubles couldn’t have come at a more inopportune time. Or maybe, they have been timed to inflict maximum pain. In September, TrueCar raised more than $200 million from investors. On January 1, TrueCar was scheduled to become Yahoo.com’s partner for auto shopping. TrueCar agreed to pay Yahoo $150 million over three years.
When Ed wrote about Honda vs. TrueCar, he opined that the “conflict could have profound impacts on the ever-changing face of the new car market.” It sure can.
The Internet changed the way we shop for cars, and the bird dogging fees pay for it. Buying services other than TrueCar can and will be next if this matter gains traction. Countless blogs that feed buying services with customers (TTAC does not) could find themselves out of money. Writers who whip up quickie “car reviews” could be looking for new work. Customers who seek price transparency may have to look harder.
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Hi Folks thank in advance for allowing my comments based on these discussions about True Car and the the pricing/negotiating practices with dealerships both domestic & import. Briefly my automotive background comes from being a National Commercial/Fleet manager for a top 100 Ford dealer in the Southeast. My selling experiences have been different based on some of the feedback given on the retail level of the industry which I can understand to be frustrating. As you may or may not be aware of dealerships spend thousands monthly to implement sales training processes designed to maximize gross on the consumers coming in to shop. Please don't get me wrong, profit is not a dirty word but the tactics need revising in this age of internet shopping and information. I have advocated for the full disclosure process which dealers seem afraid to offer so some have opted for the "one price" structure which I think would be the right option for @JustinM since whether you are a seasoned shopper or not you leave that dealer paying the same price as everyone else not based on looks or skill. Dealers have taken to the True Car concept because it offers the most reasonable way to get leads(customers) without paying for leads upfront which most are boggas (bad phone #'s, fake names etc.) it is a performance based concept which is attractive compared to the outrageous advertising costs of T.V, radio and newspaper. Believe it or not True Car actually allows the dealers to offer more aggressive pricing because the hard cost to the sale is far less than tradional means mentioned... Are you going to be pissed off at the radio station because the dealer advertised their product with them... Who do you think is ultimately paying for those ads? I think the misuse of consumer information is a legit concern and proprietary dealer info should not shared with anyone other than the Manufacturer for statical purposes. I am starting a internet consumer shopping service that I believe is revolutionary because we do not advertise or promote prices that produce results like @Trying to buy experienced with the switch and bait. Using my Fleet experience for each consumer Auto Club USA anonomously bids the desired vehicle out to several regional dealers and we pass that information on to the consumer to see what the dealer has in stock and the pricing they are willing to sell the vehicle. This gives the consumer real time inventory choices and pricing which can be affected based on many factors (dealer contests & incentives, time of month quota's, surplus inventory on a particular model etc.). After the consumer has had the opportunity to review the different proposals offered, Auto Club USA then will schedule a private test drive/product demonstration preferably at the consumers home or office (depending on distance from the dealer) unlike True Car which in so many ways dictates what the dealers should sell their vehicles for, we do not influence or direct the dealers on pricing we allow the bid process to work for itself...fair and square. In my option referrals are a great means of keeping fixed costs down for businesses and usually if a person is referred to something they are more relaxed and confident about the product and the service they will receive.
My experience with TrueCar is that it just gives dealers an opportunity to do a bait and switch. You get a price from TrueCar, print out a certificate from participating dealers, and sometimes get direct phone calls from those dealers. You confirm with the dealer that they have the exact car your looking for and they say "Sure, bring in the certificate". You get to the dealer and they say sorry, we do not have that basic model, but we have this other one with the premium package, and blah, blah, blah, for 10k more. We had one dealer when pressed to explain why they told us they had our car when they don't, say "we sold it last night."