By on July 8, 2015

truecarprice

Car buyers are tired of the dog and pony show that goes along with trying to negotiate for a new car and are quickly turning to car buying services like TrueCar as a way to get transparency into the pricing process.

While places like TrueCar will save you a little money compared to just walking in to a dealer off the street, they won’t get you the absolute best price and will do it at the cost of your privacy. TrueCar makes money by charging dealers $299 to $399 per lead once a customer that was referred from them makes a purchase. They gather data from various automotive data aggregators along with vehicle registration and tax sources and perform analysis on it in order to establish an average price paid.

One of the requirements for affiliated dealers is to give them access to their Dealership Management System (DMS) or to manually transmit vehicle sales data to a supported third-party vendor. A DMS is a management system that dealers use to manage customers and vehicles that contains information such as pricing for vehicles bought and sold along with customer details like names, addresses, and social security numbers.

TrueCar is the brainchild of Scott Painter and started as an off-shoot of Zag.com, which was a service that provided vehicle pricing data for branded car buying programs for companies and associations like the AARP. They used the Zag software engine to assist in the launch of TrueCar.com and provide similar information and buying power to the general public. In order to make the company sustainable, it turned this buying public into its product.

TrueCar makes money by selling the potential vehicle buyers on their site to affiliated dealers as leads. Dealers obtain leads from many sources and usually pay about $15-20 each for standard leads from sites like Car Price Secrets and buy them in larger packs. In most cases, standard blind leads have a single digit return and buying 100 leads for $2,000 may result in only 5 sales, costing the dealer $400 per sale and involving lots of leg work. TrueCar went a different path and set out to charge $299 for new car leads and $399 for used car leads with the additional benefit of the dealer only getting charged once a sale is completed. TrueCar calls this a ‘pay-for-sale’ model.

Many dealers that were down on their luck or wanted a boost in sales jumped at the opportunity of working with TrueCar as they knew that they would receive qualified leads and didn’t have to waste time on deals that would never go through. The dealers were happy to be getting customers and car buyers were happy to save money without spending hours haggling.

TrueCar obtains data from many sources including vehicle registrations and tax records, but the troubling source is the dealers themselves. In order to sign up with TrueCar, a dealer has to agree to their “Master Terms And Conditions” which list one of the requirements as follows:

  1. c. DMS Sales Access. Subject to the confidentiality and use restrictions below, Dealer will provide access to Dealer’s Dealership Management System (“DMS“) sales data either through (i) direct extraction by TrueCar’s third-party DMS vendor(s) (such as DMI or VIN Plus/Netlink), (ii) manual transmission of data by Dealer to a TrueCar third-party DMS vendor, or (iii) other method mutually agreed upon by TrueCar and Dealer. Upon TrueCar’s request, Dealer will connect or reconnect TrueCar’s access to Dealer’s DMS sales data within two (2) business days of such request. Dealer represents, warrants, and covenants that it has all the necessary rights to provide the DMS sales data for use as specified in the Agreement.

In most dealerships, the DMS contains all of the information on their customers and product, including completed deals. Since TrueCar has access to the exported DMS data for a dealer, they can see transaction information for all of their customers even if they didn’t come to the dealer via TrueCar. To top it all off, TrueCar transmits this data using third-party companies, introducing a middle man to the process. TrueCar does state that they anonymize all sales data and do not use any Non-Public Personal Information, but the pipe to the data is still there and I speculate that it uses an Application Program Interface (API) to move the data. While many API’s are secure, there are always holes to be found as was the case with the Snapchat API being hacked a couple of years ago.

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Some consumers may not be bothered with a small chance of a security breach if they can save a bunch of money, but TrueCar is quickly becoming just another marketing site. The site initially used the data it collected to show an actual dealer cost on a car which allowed consumers to shoot for a price close to it. After the dealers started revolting and cancelling their lead-buying agreements, things had to change. In order to rescue the company, Painter removed the dealer cost from the website and instead advertised the average savings. Curiously, the DMS connection to the dealers is also not used to populate the TrueCar price reports as stated in item 3 of their “Master Terms and Conditions” and is mostly used to make sure that dealers pay the lead fee for any sales that come through them. According to Inc, they also use a portion of the anonymized stats they obtain for data sales and automotive consulting.

When asked about TrueCar’s data storage and transmission, Alan Ohnsman, SVP and Chief Communications Officer, stated, “Just for clarification, TrueCar is not a lead-generation company — at least not in the traditional sense.”

Along with that statement he attached their dealer marketing presentation which shows how data is handled. The document specifically states that the customer name, address, phone number, and email are transmitted to TrueCar but social security numbers, credit card numbers, and credit scores are not. Full vehicle, deal, and payment information are also transmitted. The document also shows they provide limited anonymized sales data to other dealers based on the information they collect. The only security information in the document states that they use some form of AES encryption for storage and transmission of data along with keycard and biometric access control for their data centers, standard practice for even the smallest data centers. While preventing the transmission of social security and credit information gives me some additional confidence, I am still wary of the fact that TrueCar requires that the dealers have to allow direct extraction of data by TrueCar’s third-party DMS vendors even if they are not directly hooked to the DMS themselves.

You may be tempted to run to AAA, USAA, or Consumer Reports for their buying services, but your data will end up in the same hands as they are affinity partners of TrueCar and use a branded version of their product. The affinity partner program consists of more than 1,500 partners and, as stated in the Inc article above, comprises over 50% of TrueCar’s earnings. Another 38% comes from potential buyers that visit their site directly. The remainder comes from their data sales and consulting business.

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TrueCar and other no-haggle programs have done some good as many of the dealers themselves have started going to a no-haggle experience in order to stay competitive.

In an effort to make a fair comparison of current pricing, I picked a 2015 Toyota Camry LE w/floor mats as my potential vehicle and decided to do a comparison. TrueCar came back at $18,774 as its estimate and showed 3 certified dealers in the area. I visited the website of one of my local Toyota dealers that has embraced a no-haggle policy and picked the same model from their inventory. It showed a price of $18,691. I emailed the dealer to confirm it did not include any rebates or incentives I would not qualify for and they confirmed it was the correct price for me.

I had an $83 savings over TrueCar with only one email sent and did not have to give up any of my personal information.

I am sure that if I invested a bit more time with some of the other dealers in the area, I could bring the price down another $200 or $300 easily as I would be coming directly to the dealer and saving them the cost of a lead. Another option is to look to specialty programs and clubs from certain manufacturers that can save you even more on a new car purchase and are usually fairly straightforward.

I am glad that we are moving towards a more transparent culture when it comes to buying a new car and hope to see more dealers moving towards up-front pricing, but we need to be wary of our privacy when it comes to TrueCar and many other similar programs that may pop up.

The local no-haggle dealer is still part of the minority as most of the other listed prices for the same Camry were in the $19,000 to $23,000 range and would require old-school negotiation. The car buying process is slowly changing, but as long as we have dealer practices like the “Four Square” method, companies like TrueCar will find a place in the market.

Bozi has worked as a car salesman, owned a small used car lot, and exported and sold vehicles to Europe. He also has extensive technical experience due to refurbishing auction and repo vehicles as well as working on his personal projects and swaps. His background also includes IT consulting as well as electrical hacking. He daily drives a salvage rebuilt Cadillac STS, owns a project V8 Subaru Legacy GT and has wired up an LS1 Miata from scratch.

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79 Comments on “The Truth About TrueCar And Your Privacy...”


  • avatar
    mmreeses

    “car buying process is slowly changing, but as long as we have dealer practices like the “Four Square” method, ”

    while it makes my inner old man grumble, you’ll always (well at least for the forseeable future) have “four square.” majority of peeps are too lazy, too naive, too ignorant or too rich to do their own legwork.

    like my cousin’s fiance….who prefers to go through his mortgage broker ‘buddy’ instead of credit unions (like PenFed or TIAA-CREF which he could quality for), cross-shopping, etc.

    i’ve stopped being a nosy nelly and just roll my eyes in my internal brain bubble whenever people don’t take the obvious first step but insist that their way is best.

    • 0 avatar

      That is a common issue that many sales guys bank on. They want to become your buddy so you will go straight to them next time you need a car and think you are getting an inside deal.

      • 0 avatar

        Yea, they become your buddy by watching over your car when its in the service department, calling you when an extra nice trade comes in, give you rides home when you need to leave your car for service, etc. etc.

        Surely, you wouldn’t put any value on that. Surely you wouldn’t have any loyalty to someone like that. God forbid.

        • 0 avatar
          Kenn

          Regarding the 11 new cars I’ve purchased, over the years, I’ve never dealt with a car salesperson who ultimately proved to be anything more than a smiling, friendly, liar.
          “Watching over your car when it’s in the service dept.”, “…give you rides home when you leave you car for service,” — That must be quite a dealership you are involved with, because neither I, nor anyone I know, has met such a salesperson. Whether it’s slimy sales tactics or warranty service evasiveness, my experiences with dealerships make my blood pressure rise, to this day.

    • 0 avatar
      duffman13

      To be fair, sometimes mortgage brokers can do good work. I cross shopped a variety of banks and credit unions when we bought our house in 2010, but at the end of the day our realtor’s mortgage guy got us the best deal – lowest interest rate combined with the lowest number of points/fees as well.

      • 0 avatar

        I can agree on the mortgage broker front. I tried a few different banks and a mortgage broker when I was buying my house and the broker made the process much simpler and was actually able to get me an additional rebate to reduce my closing costs. It may not work best in all cases but in this case I was already halfway through getting my documents to the broker before the big banks I applied to even responded.

  • avatar
    kvndoom

    Truecar is a joke ever since it became a pawn of the dealerships.

    If they had integrity they would have shut down instead of selling out when they had the gun to their heads, but money will always trump integrity.

    • 0 avatar

      Yep, they push the angle of helping the public become more educated but make their money by helping dealers get leads or what they refer to as “Deep-In-Funnel” customers.

      • 0 avatar

        In some states TC charges dealer a flat monthly fee for completed deals. In other states, they use the per sold deal model. I’m not sure either business model should use the term “leads.”

    • 0 avatar

      How can it be “selling out” to help dealers sell cars and make money? You sound like a lifetime employee to me. Is your objective to grind a merchant into doing business with you at no margin?

      Fact is, TC was always a pawn of the dealerships. After all, dealers have always paid good money to get butts in the door. After that, its up to the dealer to kiss off an unreasonable consumer or do business where they can. Its all part of the game.

  • avatar
    gtemnykh

    I gotta say, $18,700 for a Camry LE has got to be one of the most straightforward ‘left side of the brain’ choices a consumer in the US can make. I challenge the B&B to come up with a better option for a long term (7-15 year) commuter/family sedan in the “under $20,000” bracket. The only thing that comes to my mind is an Accord, if you have a stick shift itch to scratch.

    • 0 avatar

      I agree and that’s with zero negotiating. I helped my mother in law get a Camry last year and I was able to get it down to about $18500 off the lot and she got 1.79% through her credit union for financing. For a nice commuter that will last a long while you can’t beat it. We also looked at Accords at the time but they were a few thousand more and she liked the Camry better.

      • 0 avatar
        gtemnykh

        My friend finagled a 6spd Accord Sport for $20,800 after many rounds of painful negotiations with multiple dealers. As much as I’d like to think that Honda did due diligence with reliability/durability testing on the CVT and direct injection, there’s something to be said for the Camry’s traditional port injected 2.5l and torque conveter 6 speed automatic, particularly when they don’t give up much in the way of rear world fuel economy, acceleration, etc. I just wish the Camry had Honda’s indirect TPMS system to make snow tire swapping easier/cheaper, oh and I prefer Honda seats comfort-wise.

  • avatar
    KixStart

    Hmmm… Since TrueCar has access to the dealer’s DMS, it would seem my data is available to TrueCar, whether I use their service or not. Is that so?

    Great article.

  • avatar
    Internet Commenter

    If the dealer pays TrueCar $300 for a completed deal, it seems that a shopper could taken an additional $300 off of the TrueCar price without even using TrueCar.

    Now, I imagine that TrueCar cross-references TrueCar quotes with info from completed sales and would balk if they weren’t compensated for a completed sale to a person with a TrueCar quote.

    Therefore, couldn’t a shopper simply create a TrueCar account under a different name and address, etc. and tell the dealer “take $300 of the TrueCar quote or I’ll simply bring in a TrueCar quote with my actual info.”? The dealer shouldn’t care if they give the $300 to TrueCar or to the buyer so long as they make the sale, and it wouldn’t hurt their relationship with TrueCar because TrueCar couldn’t know about the shadow quote. Moreover, this avoids the privacy concerns addressed in this article.

    Anyone know anything that would spoil this approach?

    • 0 avatar

      Most dealers will match the TrueCar price as long as the car quoted matches the car on their lot. The fake information is a common thing many people do and some dealers get more fake leads from TrueCar than real ones. As long as the dealer makes the sale, most won’t care whether they give the $300 to you or TrueCar.

      • 0 avatar

        This is exactly true. How long will TC last when consumers AND dealers figure this out. Many dealers currently use TC as a closing tool to validate their own numbers without paying TC their $300.

    • 0 avatar
      onyxtape

      I don’t know this to be a fact – but I think many businesses “scam” the likes of Groupon that way. Most of my Groupons in my account are marked “unredeemed” despite having done so.

      Of course, knowing that businesses often have to go halfsies with Groupon, I don’t blame the businesses at all.

  • avatar
    healthy skeptic

    Okay, I have to ask this: what is the different between “Factory Invoice” and “Actual Dealer Cost”? I assume it’s the combination of holdbacks and other dealer incentives, but I didn’t realize the discrepancy was as high as the $1,622 price different displayed in the legacy TrueCar app.

    My impression of the car biz is that decades ago, “Invoice Price” actually used to mean something concrete in the business end transactions between manufacturers and dealers, much closer to actual dealer cost. Over time, consumers became aware of it, so now has been taken over by sales and marketing. It’s more like another tier of consumer-facing negotiation pricing, kind of like MSRP. “Well, this car has an MSRP of $20,000, but we’ll let you have it for $18,500, which is $500 below our Invoice Price!” (Which has little to do with actual dealer cost.)

    Would that be the correct impression?

    • 0 avatar
      cgjeep

      For most manufacturers there is a 3%-5% holdback on invoice and that is their true cost. So true dealer price is invoice minus holdback. The holdback is to pay for financing the floorplan (inventory) pay for PDI, wash, ect. Sometimes there are special rebates available. So if Ford has a 2k rebate to the customer on a Focus you will see the average transaction price to be less than invoice by quite a bit. Also sometimes there are “special rebates” from the manufacturer to the dealer for particular models if car is sold. This would also lower true cost to dealer but they only get the money if they sell car during a certain time frame. Dealers actuality lose money selling new cars. They only sell them to finance them and to fix them. Used cars make dealers a lot of money too.

      • 0 avatar

        Exactly. These are the holdback figures I have saved which should be accurate for the most part:

        Acura 2% of base MSRP
        Audi No dealer holdback available
        BMW No dealer holdback available
        Buick 3% of total MSRP
        Cadillac 3% of total MSRP
        Chevrolet 3% of total MSRP
        Chrysler 3% of total MSRP
        Dodge 3% of total MSRP
        FIAT 3% of total MSRP
        Ford 3% of total MSRP
        GMC 3% of total MSRP
        Honda 2% of base MSRP
        Hyundai 3% of total MSRP
        Infiniti 1.5% of base MSRP
        Jaguar No dealer holdback available
        Jeep 3% of total MSRP
        Kia 3% of base invoice
        Land Rover No dealer holdback available
        Lexus 2% of base MSRP
        Lincoln No dealer holdback available
        Mazda 1% of base MSRP
        Mercedes Benz 1% of total MSRP
        Mercury 3% of total MSRP
        Mini No dealer holdback available
        Mitsubishi 2% of base MSRP
        Nissan 2.8% of total invoice
        Porsche No dealer holdback available
        Ram 3% of total MSRP
        Scion No dealer holdback available
        Smart 3% of total MSRP
        Subaru 2% of total MSRP (May vary in the Northern U.S.A.)
        Toyota 2% of base MSRP
        Volkswagen 2% of base MSRP
        Volvo 1% of base MSRP

    • 0 avatar

      The actual cost for the dealer breaks down to (Invoice Price) – (Holdback) – (Factory To Dealer Incentives) which is why the cost is usually lower than the invoice. Each dealer has a holdback percentage that’s either based on invoice or MSRP.

      Going along with my example above, Toyota has a holdback that is 2% of base MSRP so the Camry LE above which has a base MSRP of $22,970 will have a holdback amount of $459. The invoice price for a base Camry LE is $21,017 while our example above invoices at $22,240

      The actual dealer cost before incentives is then $22,240 – $459 = $21,781

      The cost goes down further once Factory to Dealer incentives are included which can be in the thousands at times.

    • 0 avatar
      LeMansteve

      At the end of the day, they are just numbers. Why should the consumer care how much it cost the dealer to acquire the car? Are dealer costs and rebates identical at every dealership?

      • 0 avatar
        Pch101

        “Are dealer costs and rebates identical at every dealership?”

        For the most part, yes.

        In any case, it helps to have as much information as possible. Invoice isn’t a perfect figure, but it beats the hell out of relying upon MSRP.

      • 0 avatar
        George B

        “Why should the consumer care how much it cost the dealer to acquire the car?”

        Knowing up front how much a car cost the dealer speeds up the process of getting to the lowest price that the dealer will sell the car for. The alternative is playing “battleship” with low bids, counter offers, and various time wasting steps.

        I looked at TrueCar, Edmunds, and KBB and found TrueCar to be somewhat high. Guess the difference is the cost of the lead.

  • avatar
    Fred

    Car buying services have been around for awhile. Other than Truecar’s online graph and cute TV commercials I’m not sure what the appeal is? I know they suggested retail as a good deal on a TSX Sportwagon, which was about $4000 more than I paid, so I wouldn’t recommend Truecar to anyone.

    • 0 avatar

      Good point. I always forget about the TSX Sportwagon but it seemed like a good car. Do you still own it and what are your long term impressions of it?

      • 0 avatar
        Fred

        Bozi: Lots of folks ignored it, that is why Acura gave up on wagons. I’ve had it for over a year and 16,000 plus miles. It’s comfortable, gets about 29 mpg, good AC. Hasn’t given me any sign of trouble. I’ve been thinking of upgrading the steering wheel, but so far that’s the only thing that really bothers me, and that’s only because I compare it to my previous Audi A3

    • 0 avatar
      notapreppie

      It’s a bit like the acne-fighting product “Proactiv”. It’s the same active ingredients as everybody else (benzoyl peroxide) but it has a better marketing scheme supporting it.

  • avatar
    clivesl

    Anyone ever used a buying service?

    I am facing having to buy a car soon and I’d really rather not bother with it. I’m not looking for the cheapest price, I’m looking to pick out a make model and color combo and have them go find it for me.

    Does anyone even do this?

  • avatar
    TMA1

    A couple months ago I compared the same car across Truecar’s own site, CostCo, and USAA. The USAA price was cheaper by quite a bit, in large part due to the extra $1,000 they throw into the deal.

    I was never to sure how reliable Truecar’s prices are. A couple days ago I checked out a new Mustang GT on USAA, and the price actually beat Ford’s Z-plan by a few hundred dollars (I got the Z-plan printed out at a dealer, and built the car the same way on USAA). For those unfamiliar with the A/Z Plans from Ford, most people consider those to be just about the best price you can possibly get on a new Ford.

    • 0 avatar

      The Z-Plan usually offers pretty favorable pricing. USAA uses a closed version of the TrueCar interface so their price gets an additional kick down like many of their other closed affinity partners that add their own savings to sweeten the deal.

      • 0 avatar
        TMA1

        And the fact that they beat the Z-Plan gives me some hope that they’re offering a fair price. The Challenger I built was quoted at $6,145 below MSRP.

  • avatar
    Pch101

    So you’re concerned that dealers are giving personal information to TrueCar, even though there isn’t any indication that they’re actually doing it?

    • 0 avatar

      TrueCar is collecting information from dealers with the exclusions of social security numbers, credit card numbers, and credit scores as they state in their dealer presentation and although those three items are not collected based on contract they are still in the DMS so they are accessible to them and anyone that may compromise their systems or the systems of their third party vendors

      • 0 avatar
        Pch101

        So you’re concerned about hacking, even though any dealer that doesn’t use TrueCar can also be hacked? I suspect that your concerns are misplaced; dealerships have databases with buyer information, and a hacker could conceivably steal it.

        Edmunds is also collecting transaction data at the dealer level. I doubt that Edmunds is getting it by some other means.

        • 0 avatar

          I see your point and my main concern is not with the storage of information but the fact that it gets transferred between multiple parties which allows for an added layer of vulnerability. If a dealer does not use TrueCar or another service to transfer data outside of their DMS then the hacking potential is a lot lower as all the data is inside their local network.

          That is my simple view of it as I know that dealers may use other services like Edmunds or credit check companies which have their own inherent vulnerabilities. Good call on Edmunds, I took a quick look and it appears that they use access to a DMS as well to collect data among other options such as XML export.

          • 0 avatar
            Pch101

            I’m sure that dealers transfer that data to a lot of places, including to lenders that do receive the particulars about the buyers.

            TrueCar itself doesn’t seem to pose any particular issue. The issue of data security is at the dealership level — they aren’t going to maintain multiple databases in order to protect their customers.

        • 0 avatar
          Zoom

          TrueCar, with data access to hundreds of dealerships, would certainly be a bigger target for hackers than an individual dealership, or even all dealerships for one brand.

          • 0 avatar
            Pch101

            The dealers aren’t providing the information to TrueCar, so hacking TrueCar for that data would produce nothing.

  • avatar
    dal20402

    Your name, address, phone number, and any email that you’ve ever used in a commercial transaction should be considered public information anyway and you should treat them accordingly. There are many sources to get all of those pieces of information. I’m not really bothered by this unless it turns out the dealers are giving away SSNs or credit information.

  • avatar
    Steve Lynch

    Great story, spot on.

    A lot of dealer managers I know HATE that their dealer principal fell for TrueCar’s pitch and signed up. The say that a client will come in with the TrueCar price and then demand an additional $2,500 discount.

    I told them not to worry: TrueCar is bleeding cash so fast that they will soon go away, just like dozens of other car buying services have.

  • avatar
    justgrubb

    My only problem with this article is the assumption that Truecar has free range of a dealers DMS. This is not true. Every store I’ve ever worked at with TrueCar we only allowed the feed to send matches to names, addresses, phone numbers, and email addresses, that matched the request from Truecars prospect list. If a match is found, the only additional data that is sent is msrp and final sale price excluding rebates.

  • avatar
    olddavid

    As long as people continue to devalue the time and trouble of being a dealer, they will continue to believe that in this business profit is a dirty word. When my Father threw the Hall-Dobbs management reps out of our house in 1958, he said those guys would kill our business. They did. Some still call what the originators called “system sales” a “four square” method, but it fundamentally altered the relationship of dealer and customer. It created the adversarial arrangement that still poisons the well. We resisted for 17 more years while the numbers showed we had made the wrong decision. But, we kept our dignity and our blue sky valuation, long before post sale surveys dictated the value of your point. I went north and my Dad retired to his classics, but we missed the business. But not what it became.

  • avatar
    RedStapler

    Sounds like there is still no replacement for patience and haggling skills.

    I have not bought new in awhile, but my usual MO is to go in near the end of a busy month when they could be one car away from the next tier of hold back. It also helps if you show up 30-45min before closing time so they are less inclined to try and waste time to wear you down.

    • 0 avatar

      Some of these no-haggle places are actually pricing their stuff pretty well so if you don’t want to spend a lot of time on the deal they are a good option.

      To get the best absolute price, you will have to spend time and haggle. If the salesman’s bonus depends on hitting a certain number of cars then going in towards the end of the month will be helpful. Going in a few hours before closing can work out well but it can also backfire at times and make them less inclined to work with you. Doing some research ahead of time and having a fair and firm price will get you a good deal in most places.

  • avatar
    energetik9

    I think the important angle here is that there are so many car buyers out there looking to bypass the car salesman process, they look to services like this.

    A savvy car buyer won’t use this because they will quickly determine they can do better. I did the exact same. I tried the USAA service years ago and even contacted a dealer. I quickly realized I could do much better, abandoned the USAA prioce sheet to went for the jugular (aka, invoice).

  • avatar

    Paying for leads. Yeesh. No thanks. I hope at least these buyers are qualified leads.

  • avatar
    PandaBear

    TrueCar is useful but not for buying cars. It is only useful for information on pricing.

    In Feb 2015 I was looking for a 2014 PriusV two. TrueCar showed me a few local certified dealers but they all told me after they got my number that they don’t have 2014 left and ask me to pay the market price for 2015. They keep calling and calling regardless of me telling them NO, I don’t want a 2015 unless they will sell me at 2014 price (which is $5000 off MSRP).

    So I end up looking around autotrader and found one about 6 hours round trip away, with only 20 miles on the odometer, for about $200 more than TrueCar price.

  • avatar
    sashaintx

    Bozi, excellent article. I think you’ve highlighted several issues that the current car buying process has not solved for.

    First – The actual price a dealer can/will accept on any one vehicle (new or used) can vary based on many factors including rebates, time of month, time of year, days on lot, whether or not buyer will finance through the dealer, etc. This not only makes any price information provided to a potential buyer by TrueCar inaccurate it improperly sets a buyers expectations on what a fair price for that vehicle might be and perpetuates the “bad dealer tried to gouge me” feeling.

    Second – Although TrueCar may or may not be a pure lead generation service, it certainly invoices the dealer as if it were. In your scenario where you priced a Toyota Camry for 18,774 via TrueCar, if you were to go to that “TrueCar certified” dealer 4 months later and buy something else (I’m partial to the Tundra myself) – that dealer would get a bill for $299 on that sale. Does that seem fair? Now, in fairness to TrueCar I believe their pricing model has changed and they have moved to flat fee per month cost to the dealership.

    Third – and most importantly, I (as a buyer) still have to take the time to negotiate. Using the TrueCar price or coupon doesn’t mean I won’t have to sit in the dealer’s business office and negotiate price (if they don’t have an exact vehicle matching my needs) or negotiate terms, etc. TrueCar did provide me ‘the buyer’ a service in that I have a starting point for my negotiation and TrueCar provided the dealer a service in that I showed up at that dealership – but the rest of the work is still on me.

    By the way, the last 2 times I bought a car (1 used, 1 new) it took 4+ hours…That inefficient process bothered me so much I created Najeecars.com. We just launched in north Texas and will be coming to everyone soon.

    Thanks again for the great articles – keep ’em coming!

  • avatar
    SP

    This is interesting information, and is certainly something to be aware of, especially if you’ve never used TrueCar before.

    However, I can honestly say that I have used TrueCar in the past, actually bought the car in question, and was satisfied enough to recommend it to friends and family.

    I bought that car in late 2012, and have used it to shop in recent months, but have not actually purchased another since 2012. While I am sure it has changed a little since then, the basic process seems the same.

    You go on the site, you pick the car you want (approximate trim level – you can’t pick every option), it shows you a range of prices. Based on this article, it is definitely a good idea to supplement this with additional research.

    However, I found that this basic service saved me lots of time by giving me a rough average price. It also benefited my local Mazda dealer greatly.

    Here’s how: TrueCar is how I became aware of a major dealer sales incentive that was not publicized. I was looking for an inexpensive small family hauler at the time, and was shopping hatchback Versas, Fits, and Foci. I didn’t test drive a Mazda5 because I didn’t think it was in my price range. The cars mentioned above had listed MSRPs in the $18k range. The Mazda5 listed in the $22k range. Now, the Mazda5 was on the periphery of awareness. Just to see, I checked the Mazda5 on TrueCar. I was surprised to see that they were actually trading at a price of around $19,500. Why? Major dealer cash incentive ($2,500) that was not advertised to consumers.

    After seeing this price, I went to the next step with TrueCar, which is to see actual firm pricing. This is the point of no return – after this, dealers will call you on the phone. If you don’t want to talk to them, don’t go beyond the simple price check.

    So, dealers called, my wife and I test drove, we talked price, they agreed to sell for the TrueCar price, and we picked a dealer based on dealer proximity and colors available. Anyway, we had the car bought within about a week.

    I was satisfied with the Mazda5, satisfied with the dealership, satisfied with TrueCar. I found TrueCar was a very valuable tool for me at that time.

    • 0 avatar
      onyxtape

      I also used TrueCar back in 2012 as well. I can confirm that they had the actual rock bottom price at the time. Though this was before their well-publicized “sell-out”, and I haven’t gone back to use them as I haven’t bought a car since.

  • avatar

    How did TrueCar sell out? They didn’t have a sustainable business model. They were screwing the very people who allowed them to stay in business, their dealers. How is that sustainable? They had to change.

    Further, they were illegal in many states. They had to change that. How did they sell out?

    Do consumers think they should be able to buy cars for less than a dealer’s break even point? If so, they’re going to be disappointed. If consumers are upset because of the process, dealers would be glad to get together and fix prices. All consumers have to do is convince the FTC that that is a good idea.

    Dealers are already selling new vehicles for breakeven and consumers still aren’t satisfied. That’s probably because some have to pay too much so some can pay too little. Sorry, that’s the big bad world of adult life.

    Increasingly, consumers are discovering they get a better price more quickly by going to a NON TrueCar dealer, and asking for the TrueCar price. The non TrueCar dealer has a $300. cost advantage on a new car by NOT being a TC dealer. Do the math.

    • 0 avatar

      I agree that they went to a sustainable model for them although how successful that’s going to be in the long term is questionable. They still advertise themselves as helping the buyer when they actually are not the best deal for the typical customer. I would prefer to deal with a non-TrueCar dealer as I know they are not throwing money away at programs such as TrueCar and will have lower costs per deal thus saving me money in the end. The rise of deal sites and looking to get the lowest possible price has brought a new wave of consumers that all want the secret lowest deal. Interestingly, today’s Camry is much cheaper than a matching one from 1995. The 95 Camry LE had an invoice of $17,147 and MSRP of $19,778 which adjusted for inflation comes out to $25,988 invoice and $29,976 MSRP so the buyer is getting more for their money today.

  • avatar

    I used Truecar last year to buy Ford Fusion. True car gave me some recommended price which I did not care about. Then I got e-mails and phone calls from dealers. One of them invited to me to come and negotiate – him I ignored. Other one told me that he has exact match on the lot and I asked him to send me e-mail with price. Price happened to be lower than truecar price by about 2K I do not remember exactly. I made appointment and next morning went and bought the car without any negotiations for $6000 below MSRP (MSRP was about 33K). The whole process took about 1 hour to sign to Truecar account, configre the car and reply to dealers over phone/e-mail and about two hours in dealership doing test drive/signing papers/getting loan (for which I got additional $500 off and paid off in three months).

  • avatar

    RE:”I am glad that we are moving towards a more transparent culture when it comes to buying a new car and hope to see more dealers moving towards up-front pricing, but we need to be wary of our privacy when it comes to TrueCar and many other similar programs that may pop up.”

    Transparency results in disintermediation. Any idea what happens after that takes place? Be careful what you wish for.

    • 0 avatar

      Even though Tesla has had some success with their stores I don’t see disintermediation happening. Ford tried their Ultimate Collection deal and it didn’t work out too well from everything I have read and heard

      • 0 avatar

        You’re right, because true transparency will never happen. In fact, it shouldn’t. Why should a dealers’ triple net cost be anyone’s business in the first place. So we’re all safe from “Disintermediation.”

        I was in the middle of the Ford Collection. But consumer behaviour prevailed. Consumers say one thing, then do another. Some will never be satisfied. Dealers don’t try to satisfy everyone. If they satisfy a third its a great job. Consumers will tell you they want the dealer to make money. But they want dealers to make money off of others so they can get a better deal. Then they say that’s precisely what aggravates them, that someone might get a better deal than they do.

        In the middle of all this is the FTC who wants competition at the dealer level. Consumers are pissed off at the wrong people, but that’s okay. It is what it is. If a consumer gets deal with no duress, they tend to be mistrustful that they’re getting the best deal. A good negotiator makes them fight for it. Its not just cars, its business. If you offer someone a price for something, thinking you’re low balling them, and they say YES, what happens next?

        Don’t be standing in the doorway.

  • avatar
    John

    Anyone who has any expectation of privacy online, on the phone, in the cloud, or in their computerized car is living in the ’80’s.

  • avatar

    Now AutoNation cancels, and the stock has taken a big hit.

    http://www.wsj.com/articles/autonation-to-cut-ties-with-truecar-1436480431

    • 0 avatar

      Saw that today and I expected that it was coming soon because of their Autonation Express product that they have been working on. Checked their Express price for the Camry above and it was $300 less than the TrueCar price. I wonder how long the stock will hold up since there are no net profits to be seen and lots of money being dumped into TV ads

  • avatar
    JohnTaurus_3.0_AX4N

    In the early 2000s, I worked for a Lincoln-Mercury dealer that had no-haggle pricing. I saw the “behind the scenes” numbers, and only a reasonable profit was factored in. What we offered for a trade was based on KBB and other varifiable sources. Our offers for trades were firm regaurdless of weather or not you bought our car. If we offered you $15k for your Jeep, and you found a car at another dealership you wanted to buy, but they only offered $12k for your Jeep, you were welcomed to buy their car but sell us your Jeep for $15k. We did this because we were honest with our offer, and didnt try to “make it up on the back end” (by offering you $20k for your Jeep, but adding $5k back to the price of the car youre buying, as is often the practice amongst less honest dealers).

    The post 9/11 economy (as well as major layoffs from a big employer in our area) caused our parent company to sell us to another dealership family. The change was so drastic, I quit my salesman job and later hired back in as a service writer. The sales practices by the “new” staff were awful. Every old trick in the book was used to squeeze as much money out of the customer as possible. They called it “slamming”, as in you slam the customer in the most expensive car their credit would allow them to buy. You never talked car prices, only payment amounts. If they came in with an 800 credit score looking at Sables, youd better sell them a Navigator. They would play with the numbers and outright lie, then laugh and high-five each other after you left. I heard them laughing at a customer who had traded in a mint condition LeBaron convertable. I mean, this thing was like brand new and they were bragging that they only gave them $50 for it. I asked who in the hell would let their pride and joy go for $50, and they said something to the effect of on paper it was more like $5k, but what they (customer) didnt know wouldnt hurt them.

    They eventually ran the dealership into the ground. Today, its the used lot for the Honda dealer across the street. Makes me sad, because at one time, I was proud to work there and I knew that every car I sold was a fair deal for everyone. The practices I was tought by them (before the take over) have stuck with me, and the practices I witnessed aftee the take over tought me what to look for and what not to do.

  • avatar

    RE: “Regarding the 11 new cars I’ve purchased, over the years, I’ve never dealt with a car salesperson who ultimately proved to be anything more than a smiling, friendly, liar.
    “Watching over your car when it’s in the service dept.”, “…give you rides home when you leave you car for service,” — That must be quite a dealership you are involved with, because neither I, nor anyone I know, has met such a salesperson. Whether it’s slimy sales tactics or warranty service evasiveness, my experiences with dealerships make my blood pressure rise, to this day.”

    Then you’re the guy TrueCar was created for. But since you and people like you probably don’t want to pay them for their services theyve somehow scammed dealers into paying them. So you have an ally as long as dealers tolerate them. Ask yourself this question: Who is TrueCar’s customer? The auto buyer or the dealer?

  • avatar

    RE: “They eventually ran the dealership into the ground. Today, its the used lot for the Honda dealer across the street. Makes me sad, because at one time, I was proud to work there and I knew that every car I sold was a fair deal for everyone. The practices I was tought by them (before the take over) have stuck with me, and the practices I witnessed aftee the take over tought me what to look for and what not to do.”

    And there is a dealership for every customer. All they have to do is shop long enough. What works for one dealership doesn’t work for the next. One Price has only worked anecdotally. It might work until other dealers learn how to sell against it. Same with TC. The savvy dealers use TC prices to validate their own without having to pay the TC fee. Consumers are well served to use phony info to gain access to TC pricing. Then find a non TC dealer and ask them to meet or beat the TC price. Your chances are improved because the non TC dealer has a cost advantage.

    And you are free to grind on the dealer as long as you want to. If you shop long enough, you might find a dealership that will make a mistake. And if you don’t care that they might remember you when you bring your car in for something, you can be as big of an asshole as you like. You’re the consumer. You can do whatever you want.

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