TrueCar Scam on Dealerships – Transparency For ALL?

Since writing Edmunds TMV vs TrueCar – Dealers, wake up! several months ago, it hasn’t taken much time for the BUZZ to build. The industry and dealers are starting to see exactly what is happening and how WE DEALERS have been feeding the beast for years by allowing services like Zag and TrueCar the freedom to obtain our transactional data.

I’ve encouraged dealers to audit their DMS export fields every 6 months.

I urged dealers to NOT allow these companies to have your transactional data.

I brought to light that fact that some of these services are asking dealers to sign a Perpetual Contract

Over in the forums we have asked if TrueCar is using Zag Dealer Data to Create Value? – 4 pages of comments
My original post asking dealers to Wake Up because it’s not only Zag/TrueCat that wants your data – 70+ comments
Jeremy Alicandri’s Death of a salesman? Or dot-com bust: TrueCar.com

Our good friend Jerry has a few words to say (after his TrueCar has his original video removed) …

Then we have Brad Kargui’s video…

TrueCar Jesse Toprak speaking on Transparency and Haggle Free Selling

The list goes on… (if you can add the the list, please do so in the comments)

Who’s going to win the race to the bottom?

Jeff Kershner

I’m the founder of DealerRefresh. I got my start in the dealer business when I was 18. From there I've worked throughout several departments within fixed to variable ops. Whether it’s managing the desk, perfecting sales process or studying online marketing and media trends, I absolutely love this business and the challenges it brings. On top of keeping up with DealerRefresh, I consult with dealerships and key industry businesses. My passion has been and continues to be helping dealers leverage new media to sell and improve customer service.

Please note: I reserve the right to delete comments that are offensive or off-topic.

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53 thoughts on “TrueCar Scam on Dealerships – Transparency For ALL?

    • Arnold T,

      Does HomeNet (HN) resell or “pass-thru” Dealer Transaction Data to any other vendor than TrueCar?

      Is HN TrueCar’s primary source to gain access to Dealers DMS (to those dealers that are not sourced thru HN’s sales dept?

      • From what Ive been told, HomeNet terminated its relationship with TrueCar awhile ago (I think post-AutoTrader-sale) so their software isn’t even in IOL Pro anymore so they can’t be getting any info from HomeNet. I dont know any more than that. I stopped working for HomeNet in Oct. 2010.

        • Ok, then I want you to produce a list of vendors that have dealer transaction data. You write:

          “Dealers have been sending their transactional and inventory data to 3rd parties for YEARS. This isn’t some new phenomenon that’s all of a sudden appearing. Everyone wants to single out TrueCar when, in fact, TrueCar is only ONE OF MANY companies that have their data”

          I want you to list the MANY names of vendors that have dealers transactional data. You offered one “has been” company, Autotropolis that disappeared long ago.

          • Arnold, your not going to create a list of companies, because there is no list of companies.

            Your words haunt you…

            “because silence itself is a message”

          • Dear “Guess a Lot”,

            Wouldn’t any OEM reselling a Dealers financial transaction data to a 3rd party create franchise violations, or at least franchise litigations “(read: class action & expensive)

            Would not an OEM realize that reselling this data would not increase market share? (when all OEMs are on TrueCar, then no market share leverage exists)

          • …or you could look at it like.. the better the deals consumers see, the more cars they buy. The more cars consumers buy, the higher the market share for the OEM and then more inventory can be sold to the dealer…. and back to the beginning. Just another perspective. 

            I don’t know what a franchise agreement says so I don’t know what they can and can’t do with the data. Data these days gets thrown through so many routes, there’s no telling which data waypoint is “sharing” it..

  1. Arnold, are you then saying that the OEM is sending a dealers transactional data to companies like TrueCar? Of course not. I’m not sure I understand your argument.

    • He asked for a list.. Im just saying that there are a lot of companies that get that data.. the OEM being one of them. I have no idea if OEMs are providing TrueCar with data .. although it wouldn’t surprise me.

        • “We get information from dealers and consumer systems; we also buy data from DMS providers. And we’re now seeing it come in from lenders and insurers. It’s also available at state registration tax and title office. Anyone who buys or sells a car leaves a data trail, and understanding this data can be key. This data includes make, model, trim condition, configuration of cars, all down to the ZIP code,” Painter told Auto Remarketing.” http://www.autoremarketing.com/technology/truecar-launches-clearbook-20-signs-3-year-exclusive-yahoo-autos-deal#comment-7014

          • Dear Anti-Dealer Arnold T, A PR from Zag/TrueCar is RESEARCH?

            That PR is HORSE SHIT. 

            C’Mon Arnold, read it again.  No where in that PR does it say that TrueCar gets THE PRICE PAID from any source.  

            Read it for what it says, not for what you want it to say.

          • Sorry, I was under the impression that you didn’t believe that they got data from a lot of sources. They’re saying that right there. Oh, dude, I don’t get why you fell the need to name call. That’s so juvenile.

          • AT, I get juvenile when I ask you for details on your blog link, you wrote:

            “…Dealers have been sending their transactional and inventory data to 3rd parties for YEARS. This isn’t some new phenomenon that’s all of a sudden appearing.”

            This was news to me, so I ask for details,  all I get back is “I don’t have time to reply to this”.

            If you made an assumption that was an error, that’s aok,  I make them all the time (including my juvenile replies to you). 

            Sorry, you made the bed your lying in.

            The horse is dead. I’m done beating it.

  2. Arnold, if you have or know of a list and if you have the interest of dealers in mind then I think it would only be kind of you to share this information. Taking a few minutes to put together a list could be a real help.

  3. Where is NADA on this?

    TrueCar has launched a TrojanHorse into it’s flock,and it’s NADA’s job to see the TrueCar-TrainWreck and to launch a counter offensive before TrueCar litter it’s board with shareholders.

  4. Arnold you sure have a lot of time to respond to why you don’t have time to make a list of other companies for everyone …

  5. GRASSROOTS Movement.
    This morning I submitted a lead threw
    un-Truthful Cars and when the dealers sent me their responses I replied
    with links to Jerry’s video and other threads about the dangers of True
    Car. I made sure to include un-Truthful Cars legal actions to Jerry Thibeau’s
    video posting on You-Tube and how a company with True in their name is
    afraid of the TRUTH!!!!! Hopefully they will see this as the cancer that
    it is. If we do not do something about it it will metastasize.

    LET”S GO PEOPLE>>>START SUBMITTING THOSE LEADS!!!!!!!!!!!

  6. Its amazing to me how businesses like true car even exist.  They literally leech off of dealers, costing them money, to sell them their own leads while they arm them with ridiculous information to use against us.  Its a terrible cycle.  Even worse is they perpetuate the myth that there is some secret scam to just rake customers over the coals for all their money, when most of the time were merely trying to sell a car at cost.  I hate everything about this whole true car scam.

    The only way we win is to generate more organic leads through our websites and through training our people to become better at handling them to close at a higher percent. 

    • As a consumer, I use sites such as TrueCar because I am sick and tired of the manipulation received when I go direct to the dealer to buy.  I would much rather go to the dealer and strike a deal. But, when anyone attempts that we get the old sticker price starting point, “let me ask the manager”, and gimmicks galore(tektor, scotch gaurd, (or other surface protections) extended warranty and on and on.
      Additionally once I think I have a deal I see the $400-500 “DOC FEE” crap.
       
      Want business without the PITA- Try honest advertising, honest pricing and no add-on profit centers. Advertise out the door pricing and watch the customers come back.

  7. Do you not see the real problem here? As Dealers we have become weak and complacent, we write checks to third party vendors in the hopes of selling more cars.  The call to action here is to take back our dealerships.  Stop relying on Autotrader, Tru Car, Zagg and others to get customers for you to talk to. That’s all they do, here is a person go get ‘um. Let’s fire all of them and improve our own process. How many dealerships struggle with their sales force to use the CRM? Change your policy to “If it didn’t happen in the CRM it didn’t happen”. Hold people accountable. Train appointment making on the phone, asking for referral’s, building a long term relationship, and the list goes on and on.

    If we spent all of the money on “process” instead of lead generation we would sell more cars and we would grow our market. Do any of your doubt this?How many dealerships have a written sales process that covers every step your salespeople need to make? How many hold there salespeople accountable to the process. What about managers, do they have a process? are they held accountable?

    FIRE THEM ALL!!!! All of these vendors are “Third Baseman” We hate it when a customer comes in to the dealership and we have to deal with a third baseman. These vendors are the internet version of a third baseman. And the sad thing is we PAID them to be that. 

    Take back your dealership and stop being held hostage by these third base vendors.  Send a clear message that “We are fed up and we are not going to take it any more” and throw them out of the dealership.

    • Mark, I agree that every dealer needs to require adherence to consistent training, sales, CRM and follow-up processes. Those that don’t are losing market share and it’s only a matter of time before they close their doors or sell out to a more astute dealer.

      However, having good processes alone doesn’t bring people to your door nor is having those processes in place a reason to not advertise where a significant number of in-market car shoppers are. There is a big difference between BUYING leads (here’s a person, go get um) and ADVERTISING your dealership and inventory on 3rd party classified sites (here we are, here is our inventory, you wouldn’t be searching on here if you weren’t already somewhere in the buying process, come see us if/when you’re ready).

      Perhaps a more measured analytical approach to figuring out what drives your traffic would be better than a fire-them-all philosophy? Do you consider the company from whom you buy those balloons and that inflatable purple gorilla to be “Third Basemen” too?

    • We’ve always paid for 3rd party “advertising” to sell our cars in almost everything we do to attract customers…. Be it paper, TV, radio, AutoTrader, Edmunds, billboards, mailers, big gorrillas, corporate partnerships, and the list goes on forever – including 3rd party leads… Trust me the newspaper isn’t/wasn’t there to provide news and our advertising supported that noble cause… It’s created to attract viewers/readers so they can sell advertising. No different than a 3rd party site providing “low pricing options” or even “unbiased reviews” in order to attract visitors in order to get dealers to “advertise” by buying the subsequent leads…. Pure Capitalism at its best!

      Do we need to fix processes? Yep, automotive is notoriously sloppy there… THAT is how you earn business – because in today’s world consumers don’t have to put up with only their local dealer and however poorly he wants to treat them. Trust me – 3rd parties aren’t killing the profit, it’s how poorly we treat our customer via email, phone, and when they show up…

      And I’m not a 3rd party marketing vendor – but I have run a few pretty decent eCommerce operations in my days.

  8. I just read a press release by Scott Painter the CEO of Truecar.com which I pasted below, according to him a customer that pays a dealer a good profit is a True Yuzt.  I have been watching this thing unfold over the last week with Ziegler and Thibeau and was pretty much indifferent until I read Painter’s article.  It is this guys goal to have his TrueCar price posted next to every new car MSRP, and from what I have read, that is well below invoice. 
     
    I think at this point we need to really asses the situation and decide if we a need a low life piece of crap like Scott Painter associated with our business, there is no profit in his business model for the dealer and from what Thibeau was pointing out their customers are having problems, which of course will come back to bite the dealers in the ass.

    What would happen if every dealer took this threat seriously, banned the companies taking this information from thier DMS, and cut thier ties with Truecar.com and ZAG, how long can this Snake survive without cash flow?
     
    See if you can read this excerpt from his article and feel positive about his product from a dealers point of view, (Arnold is excluded since his values no longer align with the dealers best interest.)

    “The automotive market has not behaved based on supply and demand,”  Painter told Wired.com, mostly because of information asymmetry. One example of market failure are the useless values of Manufacturer’s Suggested Retail Price (MSRP) and invoice. While they’re supposedly benchmarks of what consumers should pay, those numbers are “irrelevant” in today’s market, Painter said, because “almost all cars are selling under MSRP and invoice.”

    According to Painter, that asymmetry of information means that consumers are inherently wary of dealers, even though the average dealer only makes $640 in front-end gross on each car sold. TrueCar research shows that the average consumer would negotiate a dealer profit that is 300 to 400 percent higher if only they knew how much the dealer was really making.

    Painter says a TrueCar report is an unbiased source of information — much like Zillow or Consumer Reports — that consumers and dealers can use as a negotiating tool. A buyer who walks into a dealership with a TrueCar report, according to Painter, is ready to buy. “The dealer should embrace the fact they’re educated and not take advantage of them,” he told Wired.com.

    Right now, a look at the TrueCar website shows that there are a lot of uneducated buyers out there. Glancing at a report for the Chevrolet Suburban, the TrueCar price report shows that one wheeler-dealer snagged a deal at $36,548, while a true yutz managed to pay just over $41,000 for the same identically-equipped SUV. Painter said TrueCar could eliminate those pricing disparities “almost immediately.”

    In order to build trust inthe TrueCar brand, Painter is careful to distance himself from manufacturers or dealers. He envisions a world where dealers print a TrueCar window sticker alongside their own information, and where the process of purchasing an automobile treats a car like a commodity. “We’re transforming the market,” Painter said. Those dealers “not willing to give an upfront price are going to go out of business.”

  9. TrueCar claims they want transparency.  What they “truly” want is market dominance for their own profit.  They want to leach themselves onto every new vehicle transaction.  They want to become a drain on the already razor tight margins that dealers have.  Shut them out of your business Mr. Dealer.  Because if they are not stopped now, they may not be able to be stopped later.  They are well funded.  This is simple, do not pay for deals that you are missing by not having good people and process.  Generate your own leads through solid online advertising and make sure you convert them!  It’s simple, though not easy.

  10. I’ve been scouring the web looking for the site where, in the interest of transparency and “pricing symmetry,” Scott Painter has posted the bottom-line best rate that some dealers have actually paid for a TrueCar lead. To be truly informed and build trust in the TrueCar brand, dealers need to know if any other dealers are paying less than TrueCars’ MSRP. Is it possible that only a “true yutz” would pay the $300 – $400 asking price for a TrueCar lead? I’m just saying.

  11. i read through a few of these comments here, but wanted to watch the 1st video listed there. it is labeled private, however i think if you post the URL or it from yourtube here, i will be able to click and see it. the 1nd video, i couldn’t watch because Stephen Tyler and DMC were too loud for me to hear the guy. 

  12. I said this over on the forums, but will add it here too! I live in one the, if not the best pro-dealership states in the US, VIRGINIA! Our associations are awesome and work hard with legislators to protect dealers. Why do I say this, here is why. “Bird-dog” fee’s are illegal in Va! It is illegal to pay anyone or an company acting as a broker a fee for selling a car in the state of Va that is not lic to sell cars in Va! 

    Was at our annual Hampton Roads Auto Dealers Assoc meeting where VADA visits to bring us up to date. There was great discussion about vendors and “bird-dog” fees in Va. It is illegal to pay anyone that is not a lic salesperson in your store in the state of Va a fee for selling a car! Acting as a broker is illegal in Va essentially. Its a $1,000 fine for each case they find, to the dealer! It was said it is starting to be watched more closely and the dealer board is well aware of it! VADA stance – they are anti-broker!Just passing on the info. 

  13. Dealerships are totally screwed up in this way.  The spend thousands on lead but they seem to lose existing customers by poor treatment in sales or service.  They dont seem to understand aquisition costs.  It cost less to keep existing customers than paying for new ones.  They shoot themselves in the foot by hiring people who have no clue about selling cars.  I was at a BMW dealership where the GM hired a massage therapist and then wonders why she doesnt sell any cars.  

  14. FYI: TrueCar Dealership December Newsletter; Splitting TrueCar Open vs. Member Networks, ZAG name (brand) retired, dealership drawings, and  more… (I apologize if this has already been posted… did not see on quick review) http://dealers.zag.com/id/report/TrueCarUpdate.pdf 

    • From the article –

      3. Eliminating Underperforming Customer Acquisition Programs
      TrueCar is committed to providing significant incremental sales and improved margins to its dealer partners. Due to the expected increase in customers – while also maintaining the industry’s highest quality standards – TrueCar feels strongly that its service can pick up the slack from underperforming dealership customer acquisition programs. For this reason, TrueCar recommends that Certified Dealers re-evaluate the effectiveness of their existing marketing programs (e.g., lead generation, search engine marketing, inventory listing services, print, radio, TV, billboard, etc.) and eliminate underperforming programs. By prioritizing TrueCar-referred customers, Certified Dealers can move more metal while also improving margins.

      • Jeff
         
        “Improve margins”  thats crazy talk. The smart dealerships agree that trucar.com is an issue with the profitability of a dealership.  The next thing that will be coming out will be that Dealerships will offer under invoice prices to consumers if they “dont” go through trucar.com.  I’m sure you all know, that trucar gets paid $300 for every lead that buys a vehicle using trucar website.  This loss, plus below invoice price makes dealerships lose money NOT improve margins.  Many will say that “the dealership will make it up in finance or in service”, however most dealerships have these departments as stand alone profit centers within the dealership. In the long run many dealerships sales profitability will suffer if something is not done. A great article in the columbus dispatch in columbus ohio should be read.  It references what Honda thinks about this whole thing.  This might drive traffic, however at what cost.  Informed customers can always get a price below invoice by the good old fashion way.  Private negotiations! 

  15. Joe – “Arnold, you gotta new nick name. Arnold “I guess a lot” Tijerina. You presume to your readers to have inside facts, when “your lack of facts is itself a message”.” 
    True or False, DealerRefresh has had the lead and technical understanding of this TrueCar / ZAG (past tense) data issue for months. You represent DealerRefresh. Is this the type of post you want to see in the upcoming court transcripts? Note: I am not defending Arnold’s posts, he has the right to make his observations without getting bashed. Getting the “list of MANY names of vendors that have dealers transactional data” would likely be better done quietly offline so as not to cause employment or legal issues for one of DealerRefresh’s own.Good Selling,dtg

    • Whoa whoa WHOA there dtg.  Arnold Tijerina is in NO WAY affiliated with DealerRefresh.  In fact, I would go so far to say every single one of the administrators at DealerRefresh have the complete opposite opinion of Arnold on this particular issue.

      • Alex, If you read his comment again, he was addressing the comment to Joe, not to me. Joe is certainly affiliated with DR. He was criticizing how Joe chose to speak to me and his use of the un-professional nicknames he chose for me.

        • Arnold,

          Please let me reach out to you and apologize for my un-professional reply. I was sincerely pursuing details from your blog post because your blog post led me to believe that other vendors had transactional data. This was BIG news to me and I simply wanted to match your list against my vendor list and plug holes. When I didn’t get that list my reply was as you said… juvenile.

          My apologies to you and the DR community.