Is It Time To Reevaluate Your Opinion About TrueCar?

I have seen many issues polarize dealers, and at times energize them during my 30 years in the car business. Very few issues have rallied so many people in the auto industry to cry out than the advent of TrueCar’s advertising campaign in the Fall of 2011. In fact, since the creation of the two automotive professional networks I am involved with, AutomotiveDigitalMarketing.com and DealerELITE.net, there has been no other issue that has attracted even a tenth of the visitors to these sites, or engagement in the form of comments and subsequent posts… From October 2011 through January 2012 the most popular subject matter on many online sites catering to people working in the car business was the thorough vilifying of TrueCar.

Meanwhile, the outcry from dealers reached a crescendo of volume that was enough to get many State Dealer Associations and a handful of state regulators to “investigate” TrueCar for potential violation of everything from brokering without a license, to operating out of compliance with advertising regulations.

Amazingly enough, despite all the name calling and personal bashing that executives at TrueCar received, not a single “cease and desist” letter was sent, or lawsuit was filed by TrueCar against those of us who pushed our criticism of TrueCar beyond the boundaries of civilized and professional discussion or debate. In hindsight, I am very surprised that TrueCar took such a beating without resorting to legal measures against some of the worst name callers and accusers, including yours truly!

After receiving several phone calls and speaking with Scott Painter in December 2011 I put off visiting TrueCar’s headquarters at their invitation until just a few weeks ago. My first encounter with TrueCar executives on a face to face basis was in March 2012, at the Automotive Leadership Roundtable in Miami, FL. Bernie Brenner from TrueCar’s board came over to my table and asked me if I would sit with the TrueCar team during the lunch session and discuss changes they were making to their business model. Curiosity piqued, I accepted. Looking back on that lunch, I gave the TrueCar executive team a fairly strong rebuttal… I was polite, but explained my objections to their business model as inserting an unnecessary dealer expense. Mike Timmons, Bernie Brenner and a couple other TrueCar executives were polite, rational in their explanations and determined to convince me that they had seen many of the problems with their pricing models and were making changes so that TrueCar would make sense for dealers as a means of acquiring incremental business at about half of what the NADA average cost of advertising is Per Vehicle Retailed (PVR). At the time I remained resolute in my stated opinion that TrueCar was a bad deal for car dealers. However, I will admit that maintaining that opinion in the light of new information, changes TrueCar was making and the logic around their affinity model was already starting to erode the certainty I had in my position on TrueCar… Not that I was admitting any of that at the time!

The next time I saw any TrueCar executives was at Digital Dealer 12 in Orlando last April… Bernie Brenner approached me and asked me to bring any dealers who were avid TrueCar haters to him so he could meet them and listen to their grievances. Seemed like an odd request, but he was sincere and the entire TrueCar team was looking for people with negative perceptions of their company so they could show them all the aspects of their business model that had been changed, so that with new information these dealers might reevaluate their perception of the benefits of doing business with TrueCar.

What I have since learned is that from the beginning of January through May of 2012, TrueCar experienced a large number of dealers cancelling their TrueCar agreements and dropping out of the TrueCar program. This, combined with various state legislative issues is what prompted TrueCar to make so many dramatic changes to the way they do business. They simply had to change in order to move forward. Something that more people in the car business ought to consider!

When I accepted TrueCar’s invitation to visit their headquarters in Santa Monica, CA the timing was perfect… I arrived the day before a “all hands on deck” meeting where every TrueCar employee who works out of the headquarters was traveling in to attend. During my visit and tour I was able to spend more than an hour of quality time in detailed conversation with Scott Painter. Mike Timmons arrived a couple hours after I did and took me on a tour to meet various team leaders and department heads in the two building that TrueCar operates out of. I met many people and watched a team of TrueCar employees working directly with dealers all over the country, helping them to put deals together and sell cars. The people I met were intelligent, well spoken and knew what their part of the TrueCar mission was, and how it tied into selling cars. What I found was hardly a bastion of evil, nor were there any indicators that they were trying to eliminate car dealers or harm anyone working in a dealership. Like many companies I have visited, such as Edmunds, Kelley Blue Book, Dealix, AutoUSA, Cobalt, Reynolds, ADP and others, what I found at TrueCar was over 250 people who are educated and intelligent going about their specific duties and focused on generating more car sales for their participating dealers.

So, what about all these so called “changes” that TrueCar has made since the end of 2011? Let’s take a look at ten of them, why TrueCar made the changes and their intended impact.

10 Key TrueCar Changes – January to April 2012

In late 2011, TrueCar started receiving significant feedback – much of it critical – from the automotive retailing industry including dealers, dealer associations, manufacturers and industry consultants. In the first half of 2012, TrueCar made substantial changes to address industry concerns. By no means is TrueCar finished with implementing changes and revisions, but they do feel they have taken the necessary actions to ensure TrueCar is acting as a key auto industry partner.

Listed below are 10 key changes that TrueCar provided to me, which I subsequently edited for greater accuracy. I have validated this list with people inside and outside of TrueCar, as well viewed related documents supporting the implementation of these changes and further verified with dealers currently using TrueCar:

1. Changed Website Experience Nationwide and Billing Model in Certain States to Address Regulatory Compliance Concerns

What TrueCar Heard: Through trade publications, dealer association communications and social media sites, there was a lot of attention on whether TrueCar’s business model complied with the existing regulatory framework in certain states.

What TrueCar Did: Completely overhauled its website experience to address state-specific concerns related to advertising regulations. Among other changes, dealers no longer communicate price offers relative to invoice through the TrueCar website experience. Additionally, “bait and switch” concerns have been addressed through website features expressly clarifying that TrueCar.com users who use the website to explore the new car market are configuring “virtual vehicles” – not vehicles that are actually in inventory at participating dealers. TrueCar has also implemented a subscription-based billing model in certain states. 30 of the 50 states continue with TrueCar’s pay for performance model, while 19 other states have variations designed to comply with that state’s laws. Louisiana remains a state not served by TrueCar.

2. Overhauled Display of Information on TrueCar Price Curves and Dealer Portal to Address Dealer Concerns

What TrueCar Heard: Though not their intent, TrueCar heard loud and clear from dealers that the TrueCar price curves and Dealer Portal did not provide the most contextualized, relevant, and informative display of information to assist consumers and dealers.

What TrueCar Did: TrueCar realizes that their success depends on providing services that result in a better car buying experience for dealers and consumers. TrueCar changed the TrueCar price curves in January to provide more robust, comprehensive data that allows consumers to understand what constitutes a “fair” price in the current market. They also switched from providing “network-pricing” information in the Dealer Portal (which focused on the pricing of other TrueCar dealers) to providing “market-based” pricing information driven by recent transactions in the dealer’s local market area (not just transactions by TrueCar dealers).

3. Reduced DMS Data Received From Dealers

What We Heard: A small number of industry consultants used social media sites (such as Automotive Digital Marketing and dealerELITE) to spread misinformation that participating dealers’ sales matching data was being used to create the TrueCar price curves and/or that TrueCar actively markets to customers found in the dealers’ DMS. TrueCar data security executives swear, and all evidence I have seen shows that these are both myths.

What TrueCar Did: TrueCar only requires dealers to provide customer contact information (name, address, phone, email for buyer and co-buyer) and basic vehicle information (VIN, make/model/trim, year, new/used, stock number, sale date) in order to perform the sales matching, billing (in states with performance-based billing models), dealer scoring and analytics and reporting aspects of their business. TrueCar does not directly access dealer DMS systems and they never have. Their data extraction, normalization and compilation is handled by respected third-party vendors, such as Digital Motorworks (DMi) and Netlink. All dealers also have the option to “push” their sales matching data via FTP to TrueCar’s third-party vendors; the data received by TrueCar is the same whether the dealer chooses automated or manual sales data reporting. To address concerns that TrueCar was receiving extraneous data from its third-party vendors, TrueCar worked with both Digital Motorworks (DMi) and Netlink in February, 2012 to remove all unused fields from the data feeds sent to TrueCar, reducing the fields to just those listed above. Although I was aware that this was a false objection to TrueCar as far back as last December, it still seems like a lot of people in the business are under the false assumption that TrueCar uses DMS data for pricing curves. The reality is that they do not need DMS data to do their pricing reports, and what they would get from participating dealer DMS would be inadequate to provide the reporting they do.

4. Rolled Out More “Dealer-Friendly” Dealer Agreement, Including Indemnification

What TrueCar Heard: Some dealers told TrueCar that the dealer agreement needed to be more fair to the dealer.

What TrueCar Did: In February, they rolled out a new dealer agreement, the key aspects of which include: (i) dealers can cancel at any time for any or no reason; (ii) more clarity and control on how dealers provide sales reporting data to TrueCar; (iii) confirmation that the dealers’ sales reporting data is NOT used to create TrueCar price curves; and (iv) confirmation that dealers’ sales reporting data is NOT used to send marketing-related communications to customers. In April, TrueCar added a limited indemnification provision to the new dealer agreement. The decision to indemnify dealers is another manifestation of TrueCar’s commitment to their dealer partners and underscores that they are fully invested in standing behind the services that TrueCar provides to dealers.

5. Launched TrueCar National Dealer Council

What TrueCar Heard: Many dealers, dealer associations and manufacturers expressed concern that TrueCar was making major product, process and policy changes without incorporating feedback from dealers.

What TrueCar Did: In April, 2012 TrueCar launched a National Dealer Council with 20 Members representing 24 states, 35 unique makes and 281 franchises. The purpose of the Council is to ensure TrueCar is actively listening to dealers, and the Council is chaired by Gary Marcotte (former SVP Marketing & Strategy at AutoNation). The inaugural full-day Council meeting in April was reported as being "excellent" by those who participated, and TrueCar executives received much appreciated feedback from the Dealer Council Members. Going forward, the Council will meet periodically with TrueCar senior executives to provide guidance on how TrueCar can improve the services it provides to dealers.

6. Initiated Dealer Associations Outreach

What TrueCar Learned: TrueCar had not historically communicated with state and large metro dealer associations and paid a price for not directly engaging this important constituency.

What TrueCar Did: In March, TrueCar hired Pat Watson, VP of Industry Relations, to directly communicate and work collaboratively with dealer associations on how to help their mutual partners – dealers. Pat is the former CEO of the South Carolina Automobile Dealers Association, where he worked for 38 years.

7. Started Participating In Key Industry Conferences

What TrueCar Learned: Prior to 2012, TrueCar did not have an active presence at key industry conferences, which was perceived by some as an indication that TrueCar did not care to engage directly with the industry.

What TrueCar Did: In 2012, TrueCar has sponsored and actively participated at key industry conferences, including Automotive Leadership Roundtable in March and Digital Dealer 12 in April, and the upcoming AutoCon 2012 in September. TrueCar will continue to have an active presence at future conferences, including Digital Dealer 13, Driving Sales, J.D. Power Automotive Internet Roundtable, various 20 Groups, trade associations and dealer group events.

8. Improved TrueCar’s Social Media Response and Presence

What TrueCar Learned: Social media can be a powerful medium for individuals in the automotive retail industry to share opinions and stories that shape perceptions of many automotive professionals.

What TrueCar Did: Mike Timmons, EVP of TrueCar and an auto retailing veteran (VP Operations AutoNation; independent auto dealer; new car sales and management) has taken ownership of monitoring and responding as appropriate to social media related to TrueCar and industry-related issues. Additionally, Mike has directly reached out to key TrueCar detractors to understand and address their concerns, as well as to correct any misinformation, and he will continue to do so. In the future, TrueCar will be taking a more proactive approach to leverage social media to showcase their product, services and changes in the way they do business.

9. Increased Communication With Manufacturers

Before: Previously, TrueCar’s communication with manufacturers was sporadic and reactionary, sometimes leading to significant misconceptions.

What TrueCar Did: In the past four months, Larry Dominique, EVP Data Solutions, with over 27 years of OEM experience (former VP Advanced and Product Planning and Strategy, Nissan, plus stints at GM and Chrysler), has met with key decision makers from 20 car companies to listen to their concerns and inform them as to what TrueCar is really all about. Going forward, TrueCar will continue to directly engage with OEM management to discuss ways that TrueCar can improve the services it provides to their dealer networks.

10. Added More Dealer Support

What TrueCar Heard: Dealers told TrueCar they want more face time and direct support from TrueCar dealer-facing personnel.

What TrueCar Did: In the first four months of 2012, they added 13 new employees to the TrueCar Dealer Development Team, including Ken Potter (VP Dealer Development; former VP & GM of Internet Brands / CarsDirect; former GM of two dealerships), Amir Rizkalla (Director Account Management; formerly of Fisker Automotive and Toyota), two Area Sales Managers and four Account Managers. TrueCar is currently looking to hire 9 additional dealer-facing employees in the next 60 days, including six more Area Sales Managers (Philadelphia, Charlotte, Atlanta, Seattle, Des Moines, and St. Louis) as well as two more Account Managers, to ensure that they are adequately staffed to continue providing dealers with the level of support they want and need.

After traveling to TrueCar headquarters on a Monday in July and then visiting Southern California dealers, I returned home to Phoenix on Tuesday evening. Later that week I had an appointment with the owners and management team at Courtesy Chevrolet in Phoenix. This is the same Courtesy Chevrolet that I worked at from 2005 to 2007, and I have a close bond with the leadership team there… During my visit, which was to convince them to attend AutoCon 2012, I mentioned visiting TrueCar headquarters earlier in the week. The response I received from the owner and several managers was “we really like the TrueCar program, they have gotten a lot better about invoicing us and the business we get from them seems to be purely incremental… deals we would not otherwise have made.”

These statements and the discussions I had with the team at Courtesy, as well as all the information I had witnessed firsthand during my meetings at TrueCar, and from the conversations I had with at least a dozen TrueCar employees lead me to a conclusion I feel very certain about. It would be foolish for any dealer to ignore the changes that TrueCar has made and not reevaluate whether to do business with TrueCar based on the new information available and the changes TrueCar has made to the way they do business.

 

Researched and written by Ralph Paglia - The above represents my own perceptions and opinions, and does not necessarily reflect those of the ADM editorial staff or its members.

Be sure to take advantage of the opportunity to learn more about this topic and many relevant issues focused on growing a competitive advantage in automotive retail by registering and attending AutoCon 2012 in Las Vegas at the Aria Resort Conference Center from September 5th to the 8th...

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Comment by Stanley Esposito on August 15, 2012 at 6:37am

Thank you @David for laying out some facts. I would have to say after taking time to reevaluate truecar it does not look like they have done much more then throw money around to try to silence some critics. I will be interestted to see how some of those people will react after the ban on commenting about truecar is lifted after Autocon is over.

Comment by David T. Gould on August 15, 2012 at 4:06am

DTG Opinion / Interpretation of Ralph Paglia's - List of 10 TrueCar Responses:

Let me start by saying I believe Ralph (and the others behind AutoCon 2012) are smarter than this. Multiple times in the past threads have been started to deliberately "fire up" DealerElite and ADM members as a strategic move to grab attention. Whether that is the case here or not, my suggestion here is to burn this post to the ground (delete it) before it gets any further negative "leg" with AutoCon 2012 attached to it.

#1. TrueCar did not make changes to their website / billing based on dealer input. They reacted only when Government intervention occurred through dealer associations that brought their flawed business plan to a halt in entire states across the nation. History and source available @ Jim Ziegler's TRUE CAR and ZAG Cyber Bandits, Parasites or Good for...

#2 TrueCar changed their price curve because it's wording broke the law. Once again, Government intervention made this happen at the request of dealers, NOT TrueCar working in cooperation with dealers. See Jim Ziegler's TRUE CAR and ZAG Cyber Bandits, Parasites or Good for... for more.

#3 Ralph, You have been asked (begged) here to respond to what you meant by this statement. I find it to be insulting and a re-write of recent history. See DealerElite posted February 8, 2012 for more on the "Data Wars"

#4. Dealer friendly agreement was a by product of the above. TrueCar had no choice.

#5. Was a reasonable public and government relations move on their part. I do not believe this would have happened without #1, #2 and the challenges brought forth in #3.

#6 Note from your statement provides explanation enough for me; "...I have since learned is that from the beginning of January through May of 2012, TrueCar experienced a large number of dealers cancelling their TrueCar agreements and dropping out of the TrueCar program..."

#7. See #6.

#8. Michael Timmons has handled TrueCar's mess as well as anyone business could ask. He is acknowledged here on this thread as well as previous threads from the past. I personally respect the way he jumped into the fire feet first including setting up and maintaining a personal profile within these dealer communities.

#9. Remember Honda Drops TrueCar Automotive News? Dealers cancelling contracts seemed like a worse case scenario for TrueCar starting out... Manufacturers putting dealers out of compliance brought a potential death knoll to their business plan. Once again, not an act of working with dealers, a reaction for their survival.

#10. See #6. TrueCar needs to rebuild their dealer base. This statement reflects their efforts to build credibility for their dealership sales staff. Or is this their sales staff? Once again. Not accepted as presented.

In closing, I propose the car business, some how, managed to sell millions of cars without TrueCar AND made a lot of money this year as a result of TrueCar being put on ice. Letting them thaw is going to be very expensive. 

Unfortunately, the car business has an infamously short memory. Combine that with the constrained input here of dealer champions (due to the upcoming AutoCon 2012? legal? burned out from lack of appreciation from last encounter?) and I believe you can see TrueCar's latest strategy.

Good Selling All,

DTG

Comment by Keith Shetterly on August 14, 2012 at 11:08pm

Stan, same here, buddy, except I'd add what I'd seen online like the video link below with TrueCar.  Ralph, please answer.  Thanks.

For the public record, I don't think there's a conference around that doesn't cater to sponsors.  I want TrueCar to keep sending folks to AutoCON2012.  I want the conference to succeed for dealers--they're going to learn great things, not attend some TrueCar Re-Education Camp.  The conference is real and it has great content--you have my word on that.

However, my word is based on my reputation, which depends on both my actions and my vigilance.  So, I will, regardless, get an answer to my question about item #3--otherwise, how can anyone trust my word about AutoCON2012?  Any of you?  

Ralph?  Please answer my question:  Am I included in your list of #3?  I need to know, because I have never, ever used this or any other site for that purpose.  Thanks.

Comment by Stan Sher on August 14, 2012 at 10:59pm

Oh no...anything that I stated was facts and true information that I have observed with my own eyes in dealerships.

Comment by Keith Shetterly on August 14, 2012 at 10:59pm

And I intend to bump this thread until I get an answer.  Or until I am prevented from doing it.

Comment by Keith Shetterly on August 14, 2012 at 10:57pm

Well, Stan, I'm still waiting to see if I'm one of these people in # 3 above:  "A small number of industry consultants used social media sites (such as Automotive Digital Marketing and dealerELITE) to spread misinformation that participating dealers’ sales matching data was being used to create the TrueCar price curves and/or that TrueCar actively markets to customers found in the dealers’ DMS."  As I wrote before, TrueCar was challenged, and the team they had working with dealers failed miserably to overcome the doubts from just the video by Scott Painter I gave below, much less obfuscated contract language.  If I'm being accused of using Ralph's or Chris' site to "spread misinformation", and I wonder at that accusation because I was involved in a lot of that discussion (not because I *did* that!), then I want to know.  And you might, too.  It's a simple question:  Ralph, please answer--am I included in your list of #3?  I need to know, because I have never, ever used this or any other site for that purpose.  Thanks.

Comment by Stan Sher on August 14, 2012 at 10:20pm

I kept very quiet about this and just watched all the comments.  I know that I was a big player in causing the the issues with a few of my blogs.  In fact, just like Keith, Ralph, Jim Ziegler, Rob Fontano, Jerry Thibeau, and a few others I had a call with Scott Painter.  Someone reached out to me last night from this site because they admire my passion to ask me what I thought about this.  Let me just say that I am not happy with what TrueCar did and how they did it in the past.  I am happy that they had their problems that all of this happened after the big stir was created.  However, I did meet Mike Timmons and Stewart Easterby.  In fact, when Stewart came over to shake my hand he looked at my badge, you should should have seen the priceless look on his face.  He looked like he was about to go take a a dose of heartburn medicine because in a way I think he might have been stressed about it.  However, he was nice and political.  We talked for 15 minutes amongst the three of them professionally.  It was a good conversation.  I respected what they told me and we left off nicely. 

I have not had any dealers work with me in the last 6 months that are still on TrueCar so I cannot say how much better or worse the product has become.  I do believe that if Ralph was visiting them and they showed him improvements I respect his findings.  I do not think that Ralph would just be bought by them as he is a true leader in our space and he is very blunt and upfront about a lot of things.  Besides I think that TrueCar has stepped by allowing a few lucky people to go to the event with all expenses paid.  That is very nice of them.  Yes they were a threat to our industry but if they really made good changes I would say let them show us what good they can create.  Even if they did the changes just to gain love and respect, it is what it is.  They are so huge and they have so many resources that they when they were the "beast" we could not destroy.  All we did was help tame it.


On another note, I am excited about AutoCon 2012 for many reasons.  It is time that someone steps up to the plate and give Digital Dealer a run for their money.  Also, I am excited about speaking at this event and providing good content to the public.  I love my career and what I am able to do for automotive professionals.  Ralph Paglia has been a great friend to me and has supported me over the years and I in turn support him.  If it wasn't for Ralph and ADM or Chris and DealerElite, I would not have been able to grow and make a name for myself to provide the services that I provide.  I also think that Mike Timmons has been a gentleman to me and for that I do not have anything negative to say.

The bottom line is, do I like TrueCar?  Well, it is hard for me to like them because of their past.  However, I respect what they are doing by improving.  They got Gary Marcotte, previous executive CMO from AutoNation handling the dealer counsel.  Gary and I have become friends after being on vacation in Jamaica in Blue H*** for New Years almost 2 years ago.  He is a smart guy and I am sure that he is bringing good value to helping TrueCar become better.  Now, do not take this answer as a political one because I just laid all of my opinions and facts.  I am stating my true feelings here.  No one paid me or asked me for this.  This is my passion and it comes from the heart.

Comment by Keith Shetterly on August 14, 2012 at 9:06pm

Fair enough, Thomas.  Thanks, my friend.

Comment by Thomas A. Kelly on August 14, 2012 at 8:42pm

Lessons learned Keith..The sharks, they are a gittin smarter. AutoCon got "tied" in by choice...There was a clear option not to get "tied". Chris and Ralph played their options. It and of itself (hosting the debate) was not difficult....where they are at now, wherever that might be, is of their own choosing. They can do as they please and do not owe anyone any explanation, least of all me. RP 's title to this thread asks a question. I answered it as honestly as I know how to. I have no quarrel with Timothy's approach. He extended "positive" possibilities but expressed his doubt. I share his doubts. The two entities have come together in some form. Money was exchanged. Ralph Paglia: " What I found was hardly a bastion of evil, nor were there any indicators that they were trying to eliminate car dealers or harm anyone working in a dealership. Like many companies I have visited, such as Edmunds, Kelley Blue Book, Dealix, AutoUSA, Cobalt, Reynolds, ADP and others, what I found at TrueCar was over 250 people who are educated and intelligent going about their specific duties and focused on generating more car sales for their participating dealers." Is it an endorsement or is it a paid endorsement? Each can judge for themselves. I made comments in public posts and private emails months ago what I felt TC would be wise to do....and they did it....and it is working just as I said it would.

Comment by David T. Gould on August 14, 2012 at 8:22pm

If a picture is worth a thousand words, what does this picture say?

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