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.