TrueCar Sued By California New Car Dealers Association – For Being A Dealer
TrueCar is facing another lawsuit. We told you back on March 10th that 117 dealers in New York are suing TrueCar for $250 million. Not to be outdone on the left coast, the California New Car Dealers Association (CNCDA) filed a lawsuit today against TrueCar. The allegation on the part of the CNCDA is that TrueCar is operating as an auto dealer without a license.
Patty Glaser, an attorney representing the association, told the WSJ that TrueCar needs to act now and register as a dealer or broker, “just like our members do. We want them to do that or stop doing business.†The accusation that TrueCar is operating as a dealer without official registration comes just two months after New York dealers accused TrueCar of creating “unfair competition and false advertising.”
Using the TrueCar website, consumers take a TrueCar price to a dealership. The problem that many dealers have noted on the DrivingSales News website is that TrueCar pricing which shows how much others recently paid for the same car cuts into their profit. However, some dealers commented on our site that TrueCar leads convert, but for minimal commission for the salesman and minimal profit for the dealership. It appears that in New York, TrueCar’s actions are seen as competition for dealers and in California TrueCar is seen as an unlicensed car dealer. TrueCar of course, doesn’t agree with the recent allegations and they’ve responded in a statement.
In a press release today TrueCar responded to the allegations in the most recent lawsuit from the California New Car Dealers Association by defending its business practices. It clarified that the CNCDA is not seeking any monetary relief from TrueCar and stated that the suit is coming from a trade organization not any California dealers. Furthermore, the TrueCar press release stated, “As recently as October 2014, TrueCar met with representatives of the California Department of Motor Vehicles, which is the regulatory body charged with enforcement of the statutes at-issue in the CNCDA’s complaint. After analyzing TrueCar’s business operations in depth, including specifically those challenged by this lawsuit, the DMV did not request TrueCar make any changes to its California business operations.”
Are you happy with TrueCar? Some dealers report TrueCar leads do convert, but don’t leave enough room to make any money on the deal. Is that what you’ve experienced? Has your store used TrueCar and have you had success with them in the past? Finally, do you agree with the lawsuit accusations that TrueCar is 1) An unauthorized auto dealer or broker and 2) That they create unfair competition and use false advertising? If you don’t agree, what is TrueCar doing right and why are these accusations unfair?
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TrueCar moves iron! Yes, at the expense of every truly professional sales consultant involved with one of their deliveries. Everyone who has had to deliver a new vehicle correctly in dealerships that cannot justify a delivery department should be here screaming. Volume is the new target for the manufacturer in a global marketplace where cars last longer and the next generation of buyers are not new car crazy. Dealers, if we did not use TrueCar would people still need cars? If TrueCar changed their fee to $50.00 flat would everyone feel better? This is a great big picture still being painted and the brushstrokes are not nearly visible enough.
The issue I have with TrueCar is how they attain their data. I do not believe it is possible for them to be as accurate as they are without direct dealer DMS integration.
As a former Car dealer in California, we had to disclose on the sales contract if we were paying a “Broker Fee” — to whom, and how much. I wonder how many loyal True car buyer really know they collect in many cases more profit than the dealership?
True car is no different than the dealers we work for as salepeople. they figured out a way take a buck off of somebody else’s hard work. customers just don’t care that the average commission for the salesperson is about $100.00. it takes hours to do that. We need a union so the salespeople that sell 15 cars a month of which most are trucar minideals. Wake 100 per deal and work 60 hours a week to get there. The solution is simple
ALL DEALERS SELL ALL CARS AT STICKER PERIOD! A FORD FOCUS HAS LESS THEN $1000 profit at sticker. The dealer deserves the profit. I had a home builder grind me for hours to save $20 per month. That put the car below invoice. I told.his ” I will do that deal if he will build.a house for me at exactly what it cost him. No profit. He said why would.i.do that, I replied you just asked me to spend about 10 hours of my.life to give you.a.car and not make enough money to buy a bus pass. When was the last time you walked into a Nordstrom and said I’ll give you $2000 for.that $5000 suit.i actually hope a Mooches car breaks down the day the warranty.is up
They deserve it!
Well said!!!
It goes back to the age old question: Why are we the only industry that has all of our costs published? I do not like True Car’s model and as a dealer believe it is anti-franchise. It is socialist in that it transfers the profit to True car from the dealer and we pay them to compress our income. They calim to be helping the customer however, I can tell you as a dealer (first hand), it brings the customer closer to the old world “flim-flam” experience by forcing the dealer to experiment with less than transparent measures to re-coup the icome lost to True Car and the consumer. You work your entire career to employ people and build your business, your governed by the Monroney label, then True Car and others are permitted to publish your costs and encourage the customer to start there and work downward. It paints us the devious old school car dealers and them, the legitimate seller of the “right car deal”…(thus en-franchised). I would love to spin this around and tell the world what True car is making per transaction and have the consumer get $200 of the $300 per transaction they make. I use True Car only when Necessary. The most egregious aspect of True Car is it bastardizes primary geographical markets by driving customers out of your market by letting them know your price isn’t the lowest. FYI – the “lowest price” is $0. It is only a matter of time before the second backlash in the True car history. The last down turn resulted in them saying they would re-emerge more dealer centric and dealer friendly. It doesn’t appear that way…seems they got us to buy the salvage car and rollover our negative equity…This will be interesting to watch…
While Truecar leads do convert, there is not much room for gross on NEW cars unless it’s in the business office and trade holdback. Truecar’s model is designed to go back of invoice on a specific vehicle built by the client, not what is in stock. Many clients still feel the need to negotiate. I personally dislike Truecar as I see most deals from them hurting my bottom line and charging my dealership lead fees, a lose-lose proposition. However, those deals do help us to achieve our overall volume objectives.
I don’t support True-Car. They are a broker company and collect more profit per deal than the dealers they serve… Okay.. I am a capitalist and understand and applaud that..
My only real complaint is that they make the hard working men and women in the automobile business look unscrupulous. Overcoming that opinion in customers is hard enough without a multi million dollar campaign that says car people lie…
I work for a Honda dealership and can not post incentives. We would love to sell every customer at True Car prices. Unfortunately, some dealerships have to get an advantage by listing their dealership prices below invoice to gain a marketing advantage (until someone reports them to Honda compliance). Some send their extra low drive out quote that doesn’t tell customer all costs that will be added. These are the things that dilute profits the most. Not True Car that is cutting profits, dealerships that send quotes that won’t be honored. That is more deceptive than True Car. As before, we will honor all our True Car prices listed. Come on in.
I don’t understand the constant badgering of TRUECar. If you don’t like their business model, then don’t use their services. We are an Independent Used Car Dealer and I have nothing but high praises for TRUECar. They go above and beyond to help our dealer grow. Why is it a bad thing to promote transparency on pricing? AutoTrader and Cars.com should be sued by honest dealers that post “REAL” prices. Both AutoTrader and Cars.com allow dealers to blatantly post “FAKE” pricing with disclaimers. This industry needs more companies to promote transparency and honesty like TRUECar, instead of turning a blind-eye to trickery, bait and switch, and false advertising in exchange for overpriced monthly fees.