FTC Launches Investigation Whether Car Dealers Colluded Against TrueCar
The United States Federal Trade Commission has launched an investigation into whether car dealers colluded against the online car shopping site, TrueCar, over price competition the site encouraged. Automotive News is reporting that a number of car dealers, including the Kelly Automotive Group in the Boston area, received letters from the FTC saying that the agency is looking into whether companies in the “retail automobile industry” committed anticompetitive acts “by agreeing to refuse to deal with TrueCar” during 2001 and 2012.
Documents and emails relating to TrueCar were requested. At the time, many dealers openly criticized TrueCar’s business model, which encouraged dealers to offer discounts to compete for the business of car shoppers visiting the TrueCar site. Dealers complained about losing money on cars sold through TrueCar leads. TrueCar’s model at the time encouraged dealer to bid against each other on price. A number of dealers ended their relationship with TrueCar and the company subsequently changed procedures that put downward pressure on retail prices, bringing many of those dealers back. The company CEO, Scott Painter, made a point of saying that the FTC investigation was not provoked by a TrueCar complaint.
Mike Warwick, director of digital marketing at Kelly Automotive Group said he did not know why he was personally named in the letter to the dealer group, except that he had publicly criticized TrueCar and their business and pricing models on dealer oriented blogs during the period in question. An executive at a different dealership told the Automotive News that the letter they received mentioned comments he had made on blogs about TrueCar.
Painter took pains to distance himself from the investigation, no doubt to avoid further alienating dealers, saying that the company first learned of the investigation when they themselves were served with a letter from the FTC asking for documents. “I want to make this clear: We didn’t ask for it (the investigation), and we knew nothing about it,” Painter said. He also said the timing was odd in light of the fact that the company changed its practices and restored good relations with dealers. “It’s like calling in reinforcements for a battle that is already over,” Painter said, “It’s a pain for us and the dealers.” The company says that the number of participating dealers is back up to 6,500 stores after it dropped to about 3,200 in 2012.
The FTC would not comment on any investigation.
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Truecar is not a dealer's friend. They charge us for leads and customers expect below invoice prices and are never satisfied no matter what we do. We have stopped using Truecar. I have found the best deal is when the buyer are equally happy/unhappy. We charge a fair price, don't pack on add-ons and have outstanding customer service. In what other business does the consumer feel entitled to know the seller's true cost????
"The car business is the only business I know where the customer expects to buy your product below your cost." Legions and decades of unscupulous dealers did that. Not so much below cost, but reasonably priced. MSRP is suggested; never mind dealer invoice and holdback and all the other ways dealers have of profiting from a high ticket item that a customer does once every 3-5-10-15 years. The typical car sales form has, what, 10 lines of price entry (including TTL)? Only buying real estate is more complex. And like buying a house, a car is an emotional purchase. The seller/agent has every advantage. The internet has helped level the field somewhat.