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Ed Brooks

Ed Brooks Automotive Digital Marketer

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One real reason some dealers hate TrueCar...

There is a resurgence of anger directed toward TrueCar with the announcement of a law suit charging that the web website is engaging in false advertising. But most of the comments that I hear or have read don’t center on false advertising.  This one is pretty typical –

Note that the issue discussed isn’t TrueCar’s advertising, it’s their business model.

Here’s another comment –

And this gets to the heart of the problem, there are a lot of consumers that don’t want to negotiate. For a growing number of buyers, a TrueCar type of deal isn’t about the money they can save; it’s about a “kinder, gentler” buying process.

If you run a more traditional dealership with a more traditional process, for a lot of reasons I think you attract a more traditional buyer – the type of buyer that really wants to negotiate. And when that traditional buyer comes into your dealership armed with real ammunition (a TrueCar printout) as their ceiling, and you decide to throw some more money at the potential deal, well, you end up with the worst of both worlds.

This “collision of worlds” isn’t going to away, even if TrueCar does. And I think this is only going to get more painful for the “traditional dealership” while the more progressive dealerships will be taking more and more advantage of changing consumer shopping practices.

Tom Gorham
Ed, this is a great observation. In the best of all worlds, consumers wouldn't turn to TrueCar to purchase a car. TrueCar cleaned up its advertising some time ago so the real gripe from (some) dealers is the cost. When we, as dealers, reach the level of trust that TrueCar has with consumers, we will bypass them in direct contacts and not pay the middleman's price. We are getting there but the complainers are usually the worst offenders and the slowpokes holding back the industry in consumer's minds.
Ed Brooks
Tom – "When we, as dealers, reach the level of trust that TrueCar has with consumers, we will bypass them..." I understand that is the wish for many dealers, but I ask you; is that an obtainable goal? You can't SEO your way into credibility. You can't PPC your way into trustworthiness. And most dealerships aren't even starting from level ground, they are starting in a hole that was dug over decades. From my perspective, TrueCar isn't selling leads, they are lending – no, leasing – their credibility to dealers. For that subset of customers that doesn't want to negotiate, the credibility and validity of the price is much more important than obtaining the lowest possible price. Building trust is a really difficult thing and doubly so when you are only selling to the customer every 3 or 4 years. Some dealers can do it. For many, perhaps most, it is a bit of a pipe dream.
Mark Dubis
First we have to acknowledge a few realities: 1) People will follow the path of least resistance 2) Managers will work their pay plans (bonuses for volume) 3) The majority of dealers will look for the easiest and most cost effective solution to address a problem a. Most often they treat the symptom and do not work to provide the cure to the problem In the case of TrueCar, dealers want "leads." Here are the dealers' options: 1) A dealer can spend more money to hire and properly train the right people, provide a great work environment to retain those folks, and then make them accountable for providing a great customer experience. a. This takes time, money, and a commitment to improve the business culture. b. While initially this may not be the most cost effective avenue to take; in the long run it will pay big dividends and save $50k annually in employee turn over costs 2) Or they can buy leads from TrueCar for $299 to $399 each. Which path did 9,000 auto dealers take?
Ed Brooks
Mark - I don't think of TrueCar being in the "Lead selling" business, I think of them as being in the "Price Validation" business. Most (not all) car dealers don't have enough credibility on price to appeal to the "no negotiation" customer.
Mark Dubis
Ed - Doesn't matter what you or i think. If you ask a dealer why they sign up with TrueCar, they will tell you its for the leads. They want more buyers in the door. Yes, the "hook" for the consumer is a "price on the car" and that's what generates the lead for the dealer. TrueCar makes no profit by providing a price validation. They make money when consumers purchase. Auto dealer advertising and marketing all focuses on price so they have effectively taught every consumer to focus primarily on price. Auto dealers have been very successful in training their customers to ask about price first. When they change their advertising the conversation will change.

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