Lately in the auto industry, there’s been a lot of talk about TrueCar.com. TrueCar founder, Scott Painter, wrote a letter to the auto dealer community presenting a valid case for the benefits of his service. And dealers across the nation have raised important issues about the problems too.
Is there any middle ground?
First, in case you don’t know, TrueCar.com is a third-party service that connects with certain car dealers to offer consumers a chance to lock in a “guaranteed low price” online before they go to that dealer. Dealers pay a certain fee per lead that turns into a purchase.
Based on what people are saying so far, here are the pros and cons of using TrueCar.
- Consumers can find the lowest price for a new or used car online.
- Gives consumers more confidence to buy by giving them more information.
- Cost to the dealer is based on the purchase not just a lead.
- One in every three introductions to the dealer buys a car (per Scott Painter). (See TrueCar.com Stirs Industry Debate.)
- Low price of the car cuts into dealer profits, sometimes severely so.
- Dealers believe consumers are getting too much information, which forces dealers to go lower on price than they would like.
- Privacy of consumers’ data and of dealer pricing data may be an issue. (Disclaimer: TrueCar insists it’s not.)
- Many dealers do not participate with TrueCar so will not honor the pricing consumers see there.
In previous car purchases, I’ve done my research on Edmunds.com (and other sites) and learned about possible rebates, deals and invoice pricing. I felt like that helped me greatly when negotiating with the salesperson, so I am all for having more information. In general, the higher cost a purchase is, the more information the consumer wants—and deserves.
As a consumer, I feel like the car-buying experience has been one of the worst out there. I’ve had salesmen lie to me, highlight cupholders and safety instead of performance (because I’m a woman), and refuse to tell me the price of the car while negotiating in monthly payments instead. (I would’ve bought that Toyota Celica if we could’ve talked total price.)
But I still sympathize with many dealers’ responses. In reading many articles about TrueCar, I found two thoughts consistently returning—(1) Transparency in pricing is long overdue for the auto industry. (2) Dealers have been through a very tough time with the down economy, so I can see why they’re threatened by a service they see as a “drive to the bottom.”
The question is—Is the real bottom line that dealers are afraid of change after enduring all they’ve been through the past several years? I think so.
Consumers want more ways to get fair pricing on cars. The reality is that if dealers are not giving them what they want, they will go to other third-party services for satisfaction. Who’s fault is that? Not TrueCar’s.