After A Near-Death Experience, A Kinder, Gentler TrueCar Is Re-Born
In a world where many alleged car buying services are little more than bounty hunters that feed willing buyers to the sharks, TrueCar stood out for truly identifying dealers with the lowest price. This is about to change. Earlier in the year, one of the dearest wishes of some car dealers and OEMs nearly came true: TrueCar, the Santa Monica company that empowered customers by giving them heretofore top-secret pricing information, was under fire from OEMs, dealers, and state regulators. Losing thousands of dealers in a matter of weeks, the company nearly went out of business.
“It was a near death experience, absolutely. The company almost died,” says Scott Painter, TrueCar’s CEO in an interview with Thetruthaboutcars.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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I think commentors here are spot on: people are not opposed to businesses making a profit, they are opposed to the manner in which they earn that profit. Namely, people don't want to feel cheated. One could argue many businesses make tremendous profits without making their customers feel cheated *cough men's formalwear funeral homes junk food *cough. What makes a customer feel cheated is when there is uncertainty they cannot control. There are four elements of uncertainty in buying a car: purchase price, trade-in, financing, and options/warranties/etc. You can give your car away to family/charity and reduce one element of uncertainty. If you can pay all cash or bring your own financing you can reduce 2 elements of uncertainty. If you are sure you don't want any extra options, warranties, rustproofing, etc, you can reduce 3 elements of uncertainty. What remains is the purchase price itself. If you shop 5 dealers they will likely give you 5 prices. Dealership psychological domination tactics don't help their reputation. Pushing tiny chairs into a corner of the finance guy's office, while his huge desk towers over you and you sign hunched over on your knees. The back-and-forth, seeking approval from a guy sitting on a platform. And the waiting. Oh, the waiting. If it took four hours to buy a grape supermarkets would have a bad reputation too.
Drive by your local car dealer's house to see how little she makes. Remind yourself how much dealer money goes to politicians. Make all necessary preparations to pay the lowest price possible for that new car. True car has joined the ranks of the usual suspects.
Exactly why is it the consumer's right to have a dealer's private cost information? Dealers make plenty of money most years. In fact, you have to be pretty well heeled to get into it in the first place. The point is, they don't make it on new vehicle sales. The ROI there sucks. Name me a single business where they consumer is privy to bare cost information. Here you will get some real information from a 4 decade industry insider. The Dealer needs to make a 10% transaction gross profit to pay overhead and make any reasonable ROI. That's about $3K on the average deal. Does the consumer have any idea what expenses have to be paid out of that gross profit. Not unless they are business people themselves. If someone gets a $2K deal, the next person needs to pay $4K to keep the average. And speaking of the dealer's house... if the dealership goes tits up, they come for the dealer's house first off. Employees just lose their job.
RE: "Remind yourself how much dealer money goes to politicians." Dealer money going to politicians? Do you claim to have inside knowledge of this? If so, let's hear the facts. Real facts. Auto Dealers DO belong to a variety of associates, depending on whether or not they are franchised new or independent pre-owned. Banding together is the best way for them to protect themselves from their suppliers, who think they should be able to control the investment of those dealers. But it ain't the OEM's money. And the OEMs have only one customer. Their dealers. End users are the customer of the dealer.