TrueCar's new CEO says top goal is mending Dealer Relations

[XDCX]

Originally Posted by DealerLaw.com

AutoDealer Magazine and F&I Showroom will be publishing articles on the court decision. Regards to all, Len Bellavia

Here's a link to the report on the Court's decision from Automotive News - click here

While I thought the story was interesting, (especially since it appears to be written by a college student) the comments that followed the story were even more interesting.

[mryan55]

Originally Posted by XDCX

As I mentioned in an above post, it would be interesting to know if TrueCar has a higher participation rate with brands that historically have relied on retro and stair-step incentives. My bet is there's a strong correlation.

This is all but guaranteed. If we go back to the end of the Chrysler Group LLC bankruptcy and the start of the Fiat Chrysler partnership, I have noticed our completing CDJT dealers crawling all over each other to get TrueCar leads.

Even stores that have historically held gross and haven't concerned themselves with incremental sales like TrueCar provides have ponied up over the last few years.

TrueCar Timeline in Indianapolis DMA (the best I can remember)
2009-2010: No participating dealership
2011: We sign up
2012: Two nearby dealerships join (but both are over 30 miles from us)
2013: One of our closest competitors signs up (15 miles away)
2014 onward: Put in our ZIP code and you will get our store and our two closest competitors. Don't apply the ZIP restriction and you can get quotes from 8 of 16 dealers in GLBC District M

At the end of the day, the only one winning here in TrueCar. If we think the factory isn't our friend, this is doubly the case with TrueCar.

Not only will TrueCar entice the customer to send leads in to all of your competing CDJT dealerships, they will also tell the customer looking at a Grand Cherokee to "consider the Honda Pilot, Toyota Highlander and Nissan Pathfinder," where they send leads in to a whole bunch of competing dealerships too.

All TrueCar wants is the per-sale fee. Period -- end of story -- and they will be plenty ruthless to make sure they get it.

They must have some massive expenses though, because for all the revenue they claim to generate by helping millions of people get a better deal than their neighbors, their most recent financial showed net income of -$9.92M.

What does that loss amount to? More advertising, more dealer agreements, and more possibilities to collect from us dealers desperate for incremental sales.

I am guilty, just as many others are.

[XDCX]

Originally Posted by mryan55

This is all but guaranteed. If we go back to the end of the Chrysler Group LLC bankruptcy and the start of the Fiat Chrysler partnership, I have noticed our completing CDJT dealers crawling all over each other to get TrueCar leads.

Even stores that have historically held gross and haven't concerned themselves with incremental sales like TrueCar provides have ponied up over the last few years.

TrueCar Timeline in Indianapolis DMA (the best I can remember)
2009-2010: No participating dealership
2011: We sign up
2012: Two nearby dealerships join (but both are over 30 miles from us)
2013: One of our closest competitors signs up (15 miles away)
2014 onward: Put in our ZIP code and you will get our store and our two closest competitors. Don't apply the ZIP restriction and you can get quotes from 8 of 16 dealers in GLBC District M

At the end of the day, the only one winning here in TrueCar. If we think the factory isn't our friend, this is doubly the case with TrueCar.

Not only will TrueCar entice the customer to send leads in to all of your competing CDJT dealerships, they will also tell the customer looking at a Grand Cherokee to "consider the Honda Pilot, Toyota Highlander and Nissan Pathfinder," where they send leads in to a whole bunch of competing dealerships too.

All TrueCar wants is the per-sale fee. Period -- end of story -- and they will be plenty ruthless to make sure they get it.

They must have some massive expenses though, because for all the revenue they claim to generate by helping millions of people get a better deal than their neighbors, their most recent financial showed net income of -$9.92M.

What does that loss amount to? More advertising, more dealer agreements, and more possibilities to collect from us dealers desperate for incremental sales.

I am guilty, just as many others are.

Thanks for an awesome post.

The TrueCar business model really is insane when you look at it from a long term perspective. The OEMs lose, the Dealers lose and it will likely get worse if TrueCar expands their footprint and wants to get involved in selling F&I products, assessing trade values, etc.

TrueCar has no loyalty to anyone other than themselves and you know the TrueCar customers you sell to today will be getting spammed during the trade cycle time and TrueCar doesn't care what they buy or where they buy it - they just want another fee.

Interesting comments concerning TrueCar's most recent financial report. I haven't studied the company too carefully but that's a pretty steep loss given their revenues. Maybe they're following the PayPal business model where you lose money initially to establish your company as the dominant player and then you profit by raising volume and fees.

[mryan55]

One thing to think about is that TrueCar is already there when it comes to wanting to sell more than just the lead to a dealership.

"TrueCash" is alive and well -- and it actually has a landing page on the TrueCar website now:

https://www.truecar.com/true-cash/

Now the OEMS (well, Fiat exclusively at this point) are spending their incentive dollars to push prospects to a service like TrueCar so they can get an additional TDM to use on their Fiat purchase.

Once the new Fiat is over the curb the selling dealer will be billed $300 for the sale.

In what world does this make any sense? I wonder if FCA is getting a percentage of the fee that is collected.

[XDCX]

Originally Posted by mryan55

One thing to think about is that TrueCar is already there when it comes to wanting to sell more than just the lead to a dealership.

"TrueCash" is alive and well -- and it actually has a landing page on the TrueCar website now:

https://www.truecar.com/true-cash/

Now the OEMS (well, Fiat exclusively at this point) are spending their incentive dollars to push prospects to a service like TrueCar so they can get an additional TDM to use on their Fiat purchase.

Thanks for the link - the TrueCash concept is very interesting.

While I know many of the OEMs are just as desperate for a new car sale as their dealers are how can they possibly ignore the long term implications of supporting TrueCar? It's so incredibly short-sighted.

Does Fiat really think TrueCar is interested in keeping their customer loyal to the Fiat brand when they're ready for their next car? Additionally, is it in the OEM's best interest to train their customers to squeeze the profit margin for the dealers as tight as possible?

Originally Posted by mryan55

Once the new Fiat is over the curb the selling dealer will be billed $300 for the sale.

I'm not 100% up to speed on TrueCash. If a prospect goes to TrueCar and wants to take advantage of a TrueCash offer can the customer go to any dealer or does it have to be a dealer TrueCar already has an agreement with?

Originally Posted by mryan55

In what world does this make any sense? I wonder if FCA is getting a percentage of the fee that is collected.

I like the way you think....

While I doubt that would ever be the case it would be a great example of an OEM trying to "rub salt in the wound" as they help their retail customers chisel away at their dealers' gross margin.

[mryan55]

Since the program is relatively new and only in the Fiat sales channel right now, I'm not sure if the TrueCash can be used at any dealership or only at one enrolled in TrueCar.

I wouldn't be surprised if dealerships had to sign up for TrueCar in order to use the TrueCash certificates.

I do know that program shows up as a TDM in DealerConnect, so conceivably it could be enrolled at a non-TrueCar dealer.

One example of a similar program is a USAA Member Certificate that FCA has offered for the last 5 years or so. For that program the customer must request a quote via the TrueCar website in order to have the USAA Member Certificate show up in TDM search in DealerConnect. However, the certificate can be used at any dealership.

My personal credit union -- Pentagon Federal -- offers special APR programs all the time -- 0.49% for 36 months, 0.99% for 48 months, etc... on TrueCar purchases only. So, in the case the purchase must be completed at a TrueCar dealer. It also means that if I buy a car I end up paying the TrueCar fee in exchange for the low rate... haha.

But I am not sure how the Fiat TrueCash works. Would be interesting to know but I have very few Fiat dealer contacts.

[XDCX]

Originally Posted by mryan55

My personal credit union -- Pentagon Federal -- offers special APR programs all the time -- 0.49% for 36 months, 0.99% for 48 months, etc... on TrueCar purchases only. So, in the case the purchase must be completed at a TrueCar dealer. It also means that if I buy a car I end up paying the TrueCar fee in exchange for the low rate... haha.

That's interesting.

To your earlier point, I wouldn't be surprised if the Credit Union gets a kickback from TrueCar as part of this deal. Logically, why would the Credit Union limit the deal to TrueCar purchases unless they were getting some form of compensation?

Originally Posted by mryan55

But I am not sure how the Fiat TrueCash works. Would be interesting to know but I have very few Fiat dealer contacts.

If I get caught up on some other projects I'll do some digging.

In some ways I don't know which result would be more distasteful to the dealers:

A) TrueCash is only redeemable at TrueCar Dealers which would be another form of two-tier pricing.

B) TrueCash can be redeemed at any store but the dealer gets whacked with a TrueCar fee after the sale is completed.

[XDCX]

Originally Posted by mryan55

My personal credit union -- Pentagon Federal -- offers special APR programs all the time -- 0.49% for 36 months, 0.99% for 48 months, etc... on TrueCar purchases only. So, in the case the purchase must be completed at a TrueCar dealer. It also means that if I buy a car I end up paying the TrueCar fee in exchange for the low rate... haha.

I thought of this thread yesterday when I was reading an email that I received from USAA.

USAA has a pitch that's similar to what Pentagon Federal is offering - their deal is 0.99% for 36 months if the vehicle is purchased through the USAA Buying Service - the rate is 1.49% if the vehicle isn't purchased via the USAA Buying Service.

Here's what the Fine Print at the bottom of the email disclosed: (Emphasis added.)

USAA Car Buying Service provided by TrueCar, Inc. USAA Bank receives marketing fees in connection with the Car Buying Service.

So, USAA is offering me a 50 basis point discount if I purchase a vehicle via TrueCar and TrueCar's paying USAA a kickback.

[mryan55]

USAA and PenFed were two of the first TrueCar partners back in 2009... no surprise that it continues to this day. Not that there is anything inherently wrong with a credit union having a car buying service and incentivizing purchases through it.

The bigger issue for me is just how big TrueCar has become -- so much so that they can pretty much through their weight around and request/demand crazy amounts of data out of the DMS.

[XDCX]

Originally Posted by mryan55

USAA and PenFed were two of the first TrueCar partners back in 2009... no surprise that it continues to this day. Not that there is anything inherently wrong with a credit union having a car buying service and incentivizing purchases through it.

Interesting - thanks for the information.

I'm pretty sure that USAA had an in-house car buying service prior to 2009 - I wonder if they scrapped it in favor of payments from TrueCar? I know Costco still has an in-house car buying service - I bet TrueCar would love access to the Costco customers since they're a great demographic. (Costco has some of the most affluent and highest educated customers of any mass merchandiser.)

Originally Posted by mryan55

The bigger issue for me is just how big TrueCar has become -- so much so that they can pretty much through their weight around and request/demand crazy amounts of data out of the DMS.

I totally agree.

I wonder if the NADA or any of the state Dealer Associations have taken a public stand on TrueCar?

If I get a chance I'll do some research. My bet is the NADA is silent on the issue but I've been wrong in the past...

[mryan55]

I also think Penfed had a car buying service long before TrueCar. But knows, perhaps monetizing it via broker fees paid by the dealer and letting TrueCar manage the program works out best for the credit unions too?

[XDCX]

Originally Posted by mryan55

But knows, perhaps monetizing it via broker fees paid by the dealer and letting TrueCar manage the program works out best for the credit unions too?

That's my bet too.

As I recall Costco had over 100 people managing their car buying service - it would take a lot of fees from their "member dealers" to cover that payroll. I'm sure TrueCar has a pitch that makes it tempting for credit unions to outsource their car buying service and just collect fees from TrueCar.

[mryan55]

Originally Posted by XDCX

Interesting - thanks for the information.

I'm pretty sure that USAA had an in-house car buying service prior to 2009 - I wonder if they scrapped it in favor of payments from TrueCar? I know Costco still has an in-house car buying service - I bet TrueCar would love access to the Costco customers since they're a great demographic. (Costco has some of the most affluent and highest educated customers of any mass merchandiser.)



I totally agree.

I wonder if the NADA or any of the state Dealer Associations have taken a public stand on TrueCar?

If I get a chance I'll do some research. My bet is the NADA is silent on the issue but I've been wrong in the past...

I did a little bit of clicking around to find an NADA position on TrueCar, and I couldn't find anything substantial.

I did find an Automotive News article from last summer that does state the position of the California New Car Dealers Association, which had at the time filed suit against TrueCar.

Link: http://www.autonews.com/article/2015...aga-continues#

[steve_biegler]

Originally Posted by mryan55

I did a little bit of clicking around to find an NADA position on TrueCar, and I couldn't find anything substantial.

NADA hasn't taken a meaningful stand on anything for a long long time. The definition of a paper tiger if I've ever seen one. Really to bad. NADA could be a huge help to the dealers if they had any testicular fortitude. Sadly I don't see that happening any time soon.

[57years]

Gosh... I really like that "Steve Biegler" guy....

NADA is a creature of the "go forward" dealers....

NADA will "rock" but never "overturn" the boat...for fear of risking the dues and participation fees of the membership.

When it comes to any major minority (not with racial meaning here) affected issue, NADA will bluster and fade.