It's War! Car Dealers VS TRUECar

This is the second time that the car dealers have declared war on the online company, www.TrueCar.com. The last time was in 2011 when thousands of car dealers boycotted TrueCar to force them out of business. The U.S. Justice Department investigated this for being an “Illegal Boycott” and, as far as I know, it’s still under investigation. The car dealers were joined by their state dealer associations (well financed political lobbying groups). These lobbyists pressured legislators and state attorneys general to find legal reasons to stop TrueCar from doing business in their states.

The car dealers almost won the last war by depriving TrueCar of millions of dollars in revenue (TrueCar earns $299 for every new car sold through their referrals). TrueCar was losing money and almost went bankrupt, but Scott Painter, the founder and CEO, was able to negotiate a truce with the car dealers and their political lobbying groups. TrueCar began to grow very rapidly again. They signed up dealers very quickly because they were attracting millions of car buyers. They grew to about 10,000 car dealers and are selling about 5% of all the cars sold in the USA.

 You, the car buyers, love TrueCar when you experience their service. Why? Simply because they offer an honest, low price and a fast, pleasant car-buying experience. Car dealers make their money by negotiating (haggle and hassle) the highest price that they can on each customer that walks into their showrooms. You and your next door neighbor might buy the exact same car but your neighbor might pay thousands of dollars less because he was a better negotiator. In most dealerships no two people pay the same price for a car. Typically the disadvantaged in our society end up paying the highest prices which is most unfortunate because they can least afford it.

You might be wondering “If the car dealers hate TrueCar so much, why do they have 10,000 dealer members?” That’s a good question and the answer is that car dealers “see the handwriting on the wall” and know that TrueCar is the wave of the future. Only a limited number of car dealers will be signed by TrueCar and they are getting close to that limit right now. TrueCar will never sign up all of the dealers. They will sign only enough to have representation in all markets. Dealers have rushed to join TrueCar for fear they will be left out in the cold when most car buyers find out that the only sure way to get an honest, low price is through a TrueCar dealer. Most TrueCar dealers joined up because they feel they have no choice…they have too!

But, there is a hardcore group of dealers that HATE TrueCar intensely. These dealers are usually owners of a large number of dealerships or publicly held dealer groups like AutoNation. AutoNation was recently “fired” by TrueCar when they were caught cheating on the fees owned to TrueCar. AutoNation was not only cheating on payments but they were not providing the transparency in pricing promised by TrueCar. They were using TrueCar to attract customers expecting an honest, low price and then charging them more than the TrueCar price. When confronted with this, AutoNation refused to turn over their sales transaction data which would have proven TrueCar’s charges. AutoNation claimed this data was proprietary even though all other TrueCar dealers (including me) gladly provide it to TrueCar.

Car dealers that own a large number of dealerships are very wealthy; many have nets worth exceeding a HUNDRED MILLION DOLLARS. Dealership groups like AutoNation are also very flush with cash. There’s nothing plaintiffs lawyers like better than rich men and companies that are angry with, and/or feel threatened by, a competitor! Lawyers in New York and California leaped at this opportunity. Most lawyers don’t care whether their clients are right or wrong; they do care about how much money they can make. Smart plaintiffs’ lawyers ALWAYS structure their fees so that they get paid handsomely even when their client loses.

Lawyers in New York and California where TrueCar has the most dealer-partners knew a great opportunity when they saw one. Most of them were already lawyers for car dealers and knew how much their dealer clients hated TrueCar. Even though these lawyers, and likely the car dealers, knew that TrueCar was in the right and lawsuits would be judged without merit or even frivolous by the courts, they proceeded for two reasons. First, collectively, they have more cash than TrueCar and might be able to force them to settle favorably for the car dealers. Secondly, they might be able to drive down the TrueCar stock price. If they can accomplish that, other plaintiffs’ lawyers would join in the fray and file class action suits on behalf of TRUE stockholders. Their hope was that, by joining forces with the stockholder class action lawsuits, they could put TrueCar out of business.  TrueCar stock plummeted and they were sued in class action suits representing the stock holders. TRUE stock has plummeted from a high of 25 to $5.99  as I write this article. The further the stock price drops, the more incentive for more shareholder suits.

This is truly a “David vs. Goliath” battle similar to what Uber is fighting against the entrenched taxi and limo companies of the world. Uber and TrueCar both provide far better, less expensive, honest services for their customers, but they are outnumbered and out financed by entrenched old ways of doing business. Change is a very difficult thing to bring about. I believe that truth, justice, and transparency will prevail for TrueCar as well as Uber.

I urge you to join the fight on the side of TrueCar the next time you buy a car. Click on www.TrueCar.com. You will be offered a platform to specify the exact car you want. You will be shown the prices for that car in your market, not just your price but the lowest prices, the highest prices and the average price. You will then be given three certified TrueCar dealers in your market and three low prices. You will be shown all extra fees that they might charge like doc fees, dealer fees and dealer installed accessories. You select the dealer of your choice and before you even visit that dealer you have an “out-the-door” price plus government fees (sales tax and tag) only. If you encounter any problem with that car dealer, you can contact TrueCar directly at 1-888-TRUECAR and they will make it right. You can also call me on my personal cell phone, 561-358-1474.