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TrueCar sued by dealers

Discussion in 'Automotive News, Press Releases, and Events' started by Jeff Kershner, Mar 9, 2015.

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  1. Jeff Kershner

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    TrueCar sued by dealers for 'false advertising'

    Dealers representing 117 new-car franchises are suing TrueCar for more than $250 million, claiming they are victims of false advertising and unfair competition. In the complaint, the dealers argue that TrueCar's advertisements falsely claim that consumers who use the vehicle-shopping site's services can buy a car without haggling or negotiations.

    Agree or disagree?

    Read the full article on AutoNews.
     
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  3. Tallcool1

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    The thing that stands out to me with TrueCar is they state in their commercials and on their website that you can see what others PAID for the car you are looking at.

    How can you see what others PAID? You can see what other cars were PRICED for. As a real stretch you might be able to see the vehicle price BEFORE trade in overallowance. But how can TrueCar know how much others actually paid?

    To me, I saw that alone as a law suit waiting to happen.

    I am not real sure how an organization that big can be that [email protected]%ked up. It is just one thing after another with that organization.
     
  4. amirxl

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    Is it possible that they receive an inventory feed of some sort directly or by a third party, which exports invoice/cost price unintentionally?
     
  5. Tallcool1

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    No, they are promoting their service to disclose ACTUAL SELLING PRICE, not an advertised price or anything of that sort. You can see what others PAID for the same vehicle. Even the buyer doesn't know what the net sale amount is if there was a trade in over or under allowance. The only other way they could get that information is from the dealer that sold the vehicle.
     
  6. amirxl

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    But it's only information obtained from dealers who have subscribed to TrueCar right? It's not like they're scraping every franchise site for their information?
     
  7. MannyLuna

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    Yes, they get the feed from the OEM's and many feed companies, HomeNet is one and the huge one is based out of Chicago that buy, sell and trade with all the 3rd party sites from what I hear.
     
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  8. Tallcool1

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    To be clear, you are saying that dealers are feeding ACTUAL TRANSACTION DATA back to TrueCar? I am not talking about the price of the vehicle on their website. I am talking about the details of the actual transaction.

    So the vehicle is on the website for $20,000. Anyone with a desire can find out what every like vehicle is priced at by scrubbing website data, paying for a feed, looking on any number of 3rd party sites etc. BUT, the vehicle on the website is actually sold for $20,000 less a $5,000 trade allowance that had a $4.000 ACV which makes the NET sale amount $19,000. The only way TrueCar gets this data is from the dealer......or they don't really have it.
     
  9. DealerAdvocate

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    If the question here is if we agree or disagree that the lawsuit has merit or not then I would tend to think that it does not, based on the limited information available. I have not read the complaint but their claim that a customer can buy a car without negotiation using TrueCar sounds valid. It is also valid to say that a customer can buy a car without negotiating without TrueCar.

    This lawsuit is likely retribution for the fees that they begrudge TrueCar for charging on top of the tremendously unprofitable deals that they have to agree to in order to be competitive and I truly wish them luck. Selling new cars is hard enough without feeling like there is yet ANOTHER third party standing between you and your customer. Unfortunately, this model reminds me of the Hydra from Greek mythology whereby cutting one of its heads off will just prompt another to grow in its place.

    This trend can be reversed if we as dealers can make our showrooms and our websites the easiest place to get information. Customers flock to these sites for the vague promise of a price that is so low that nobody can do better. Most dealer websites require a form to be filled out to get this information (which is also what TrueCar requires in order to "register") but the customer gets to feel like they are "beating the house" which satisfies their emotional need to win. At some point, a dealer needs to determine what the threshold is for a deal that they will not pursue and stick to it. Too often I heat the justification for taking a bad deal as "I wanted to move a unit" and I understand the ways that the total deal value needs to be considered but its easy to exploit this rationale and find yourself so far down the rabbit hole that your only friends are a Cheshire Cat and a caterpillar smoking a hookah.
     
  10. Jeff Kershner

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    Clint,

    If I recall correctly, you're still getting your feet wet so I can understand any confusion around this.

    TrueCar get's a lot of TRANSACTIONAL data from participating dealers allowing them to access their DMS. This was a HOT subject a few years back. TrueCar had an advantage due to Zags (sister service) sizable footprint. Zag charges for the Lead to Sale rather by price per lead. Dealers LOVE that. Only pay when you sell a car. BUT in order to match leads to a sale, Zag needs access to your dealers DMS. While they're in there, they go ahead and grab the transactional data associated with all the deals. From there, they can get a good idea (most times) of what the dealer sold the car for. Enough dealers, enough sales within a region and you have some data to work with in order to determine the averages.

    This article on the blog provides some more details, while it also caused quite a ruckus.

    I hope this answered your original question.
     
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  11. Jerry Thibeau

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    When are the rest of the dealers going to wake up and realize TrueCar is not your friend? Now they have partnered with a finance company and it's only a matter of time before they offer service contracts. Be no place left for dealers to make a profit. The more TrueCar makes, the more they advertise. The more they advertise, the larger their customer base grows. These are customers that would be dealing directly with your dealership instead of using TrueCar as the middleman.

    Baffles me that nobody gets this!
     

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