Remember
that you heard it here first. There is a company that “gets it” when it comes
to selling cars. If you’re a reader of my weekly column and blog, you’ve heard
me mention TrueCar before. In full disclosure, I’m a dealer for TrueCar and I’m
also a member of their national dealer council.
The CEO of
TrueCar is a very smart man named Scott Painter, and about 10 years ago he
figured out that the way to be successful in the retail car business was to
create a company that always told the truth about selling cars. He saw that
most car buyers, not only disliked the car buying process, but actually feared
it. He knew that car buyers are usually fearful that they will pay too much for
their next car. Nobody likes to be taken for a sucker. How bad do you feel when
you find out that your friend bought the same car that you did for $2,000 less?
He read the annual national Gallup polls that ranked car dealers last in
honesty and integrity. He saw and heard the bait and switch advertising and was
aware of the unethical and deceptive sales practices that exist in most car
dealerships.
Scott
Painter also saw the amazing success of 21st century companies like
Apple, Amazon, Starbucks Costco and Nordstrom. They are successful because
their customers believe what they tell them is true. He saw a huge opportunity
if he could create an online company that would take the fear and distaste out
of buying a new or used car. Scott found a group of very smart investors who
shared his vision and TrueCar was born.
TrueCar
sells cars through existing dealerships.
To become a TrueCar dealer the dealership must allow TrueCar to access
their data management system, DMS. TrueCar keeps this information confidential
and does not disclose the name of the individual dealers. But by analyzing the
data of all the cars sold in a market, TrueCar knows what each year-make-model
car is selling for. They can then tell prospective car buyers what they should
pay for that car. The buyer knows the price of the average transaction as well
as the lowest and the highest transactions. TrueCar then gives them the
“TrueCar Price” which is the lowest price that a TrueCar dealer will sell that
car for. This price is a good, low price, considerably below MSRP, and lower
than the average price transaction in that market.
The TrueCar
dealers are giving you a low price because they know you are comparing their
price with, not only other TrueCar dealers, but other dealers for that make in
your market. The TrueCar dealer is contractually obligated to sell you that car
at the price he posts on the TrueCar website.
I’m not
suggesting that buying a car from a TrueCar dealer today is completely without
risk. I am saying that it’s the safest way to get your best price on a new or
used vehicle. You should still shop and compare your TrueCar price with at
least two other car dealers. TrueCar is evolving and improving their processes
and their dealers continuously. I speak from the perspective of a member of
TrueCar’s dealer council. Last week I attended a meeting in Santa Monica, Ca. where
I met with Scott Painter and all of the top executives of TrueCar. Plans are in
the works for even more transparency when it comes to the TrueCar price.
Scott
Painter walks a tightrope between the car dealers and the consumers. The car
dealers, car dealer associations, and politicians (influenced by dealer
lobbyists) rebelled against TrueCar two years ago. Dealers did not like the
fact that TrueCar was requiring them to offer their lowest price to the car
buyers. Most car dealers think that the “haggle and hassle” way of selling cars
is the best way to make more money and sell more cars. Dealers quit in large
numbers and TrueCar lost over half of their dealers nationwide. This mass defection was aimed at the heart of the True Car business model: in several states, True Car charges dealers $299 for every new car sale and $399 for every used car sale generated through their referral process. The FTC is
currently investigating this as an illegal boycott by the car dealers and it
hurt TrueCar financially.
Since then, TrueCar has rebounded strongly and
is currently bigger and financially stronger than ever before. Dealers have
come to realize that they do sell more cars with TrueCar, albeit at a lower
profit. TrueCar is growing exponentially and I expect them to be the main way
that cars are bought and sold in the USA within the next ten years. Scott
Painter has a favorite saying…”Truth Sells”. In fact, he bought the URL, www.Truth.com. He’s looking at expanding the
honest way of retailing to other industries worldwide. Who knows? We may be
buying houses, stocks, and insurance through a “True” company in the next
decade.
My advice to
you, the car buyer, is that the next time you buy any new or used car, click on
www.TrueCar.com. My advice to the car
dealers (who regularly read my column and blogs) is “Get aboard the TrueCar
train before it leaves the station.” The way TrueCar is growing, you may not be
able to sign up with TrueCar in the future.
TrueCar will sign up only a limited number of the franchises of one make
in a particular market. By the way, TrueCar also won’t sign you up unless you
agree to play by the rules and they will enforce the rules. Hiding dealer fees
and dealer installed accessories when you quote the price, bait and switch, and
all those other shenanigans are strictly forbidden. But don’t be afraid,
because you will sell more cars and have happier customer because, as Scott
Painter says, “The truth sells.”
