Here's the just published letter from TrueCar President, John Krafcik, to AutoNation - effectively drawing a line in the sand -
May 23, 2015
Mr. Bill Berman, Executive Vice President and Chief Operating Officer
Mr. Marc Cannon, Chief Marketing Officer, Senior Vice President of Communications & Public Policy
AutoNation, Inc.
Dear Bill and Marc,
To summarize our recent conversations, we appreciate and deeply value TrueCar's partnership with AutoNation, but to continue that partnership we must require that AutoNation comply with the same TrueCar marketplace requirements with which our other Dealer partners comply. These marketplace requirements and their materiality to our business relationship are discussed below:
Sales Data: In order to (i) receive Pay Per Sale billing in which Dealers shift 100% of marketing risk to TrueCar and (ii) have access to millions of deep-in-funnel customers using 600+ TrueCar-powered auto buying sites (TrueCar.com, TrueCar mobile, USAA, Consumer Reports, AARP, GEICO, Employee Buying Sites, AAA, American Express, U.S. News and hundreds more), it is a mandatory marketplace requirement that all participating Dealers provide TrueCar with continuous access to limited sales data covering all finalized sales records. This data is necessary to power our sales matching system, which is the basis for identifying sales in Pay Per Sale billing.
Specific Fields Required: Customer Details (names, addresses, phone numbers and email addresses for buyer and co-buyer); Vehicle Details (VIN, year, make, model, trim, new/used flag, MSRP, stock number) and Deal Details (sale date, deal number, deal status, salesperson name, dealership ID). If Dealers want advanced analytics (at no additional cost) on how their transaction prices stack up in their local market, they also provide transaction details to TrueCar.
Collection: TrueCar does not directly access Dealers' DMS systems and never has. In order to collect the limited sales data we need to power TrueCar's fully accountable billing method, AutoNation can either "poll" or "push". Under "polling," a trusted third-party like DMI (owned by CDK Global, Inc.) will securely collect the limited sales data defined above from AutoNation's DMS system. Under "pushing," AutoNation will directly deliver a daily file with the limited sales data above to TrueCar via a secure FTP site. To safeguard consumer Personally Identifiable Information, TrueCar requires PGP/GPG encryption of the file and SSH key authentication to access TrueCar's secure FTP site.
Financial Terms: AutoNation has been a valued long-standing partner and we want to continue doing business with AutoNation in a mutually beneficial manner. TrueCar is the auto retail industry's only large-scale, fully accountable customer acquisition partner. TrueCar does not charge Dealers for impressions, listings, leads or clicks; rather, TrueCar only charges Dealers for sales (in applicable states). Additionally, TrueCar's current published Pay Per Sale service fees -- $299 for new vehicles and $399 for used vehicles -- are well below industry average.
As good partners and recognizing that AutoNation is the largest auto retailer in the U.S., TrueCar will provide AutoNation an additional 10% discount off the TrueCar published Pay Per Sale service fees if greater than 90% of AutoNation stores use the TrueCar platform and abide by all marketplace requirements. We also realize that attribution – especially around same-day walk-ins and customers who also access AutoNation.com -- can be an issue and TrueCar will provide limited partial credits under clearly defined rules.
Bottom-Line: The above billing structure and financial terms will provide AutoNation with a fully accountable solution that delivers a large and growing amount of sales with very attractive economics. By our estimates, the TrueCar platform was responsible for at least 7% of AutoNation's new vehicle sales in Q1 2015. As with all of our Dealer partners, TrueCar's investments are creating growth opportunities for AutoNation and we believe the TrueCar platform could represent more than 10% of AutoNation's new vehicle sales by the end of 2015.
TrueCar bears substantial development, marketing and other expenses in order to build, manage and support a marketplace with over 6 million deep-in-funnel customers per month, a 25% over-index level of Millennial car-shoppers, and an over-50% mobile engagement rate. As a result, TrueCar must maintain and enforce consistent marketplace
requirements to preserve our brand, and to ensure an equitable playing field for our 10,000-plus Dealer partners and the car buyers that they serve.
We are committed to moving forward under these terms but we need to reach a decision about these open items promptly. In the trailing 12 months, TrueCar suspended over 300 Dealers who did not meet marketplace or customer requirements. We are prepared to take similar action here should AutoNation elect not to follow our marketplace
requirements. We are approaching this matter in a good faith manner and are hopeful we can continue being partners.
We look forward to hearing from you as soon as possible.
Sincerely,
John Krafcik, President, TrueCar
Mike Timmons, Senior Vice President, Dealer Development, TrueCar
(From the Automotive News story dated July 11 - A lunch date, then a breakup, Inside the AutoNation-TrueCar divorce)
