"TrueCar sued by dealers for 'false advertising"

Dealers representing 117 new-car franchises are suing TrueCar for more than $250 million, claiming they are victims of false advertising and unfair competition. In the complaint, the dealers argue that TrueCar's advertisements falsely claim that consumers who use the vehicle-shopping site's services can buy a car without haggling or negotiations. The filing dealers are not current users of TrueCar, though some have used the service in the past.

Read more here see the lawsuit PDF attached: 

"TrueCar sued by dealers for 'false advertising"

Manny Luna

CEO/ VL Digital Marketing

Sell a Car and Be a Star!

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Comment by Mark Dubis on March 12, 2015 at 12:58pm

Let’s look at some facts about TrueCar & the Auto Industry

  • Latest NADA and Urban Science stats said new car dealerships sold approx. 16.5 million new and 9.9 million used (retail) vehicles in 2014

  • Consumers bought over 600,000 vehicles from TrueCar dealers in 2014. That means using numbers from above; they were directly or indirectly responsible for only 2.3% of vehicle sales last year from new car dealers.

  • 97.7% of  new and used vehicles sold by new car dealers are NOT sold via TrueCar

  • While they run the auto buying program for USAA some articles have shown that more than 66% of USAA members buying cars do not use TrueCar

  • Scott Painter, CEO of TrueCar also was the founder of CarsDirect who offered consumers a “better way to by cars. Their financial statements showed they lost about $250 on every vehicle sold.  Someone figured out that was not a sustainable business model and the company was sold.  It is now a classified auto shopping website.

  • TrueCar’s Income Statement indicates they lost $48.43 million in their last fiscal year.  So their 600,000 unit sales brought in $206 million but they burned through over $250 million to get their $48 million loss.   Their losses during each of the last three years totals $148 million.   This track record should be sending up red flags to shareholders and auditors of this company.    http://biz.yahoo.com/e/150312/true10-k.html

  • TrueCar’s website has 4.2 million visitors a month, but with only 50,000 sales a month from their network they have a visit to sales conversion rate of only 1.16%. 

  • Invoicing issues are still a problem and they issued 8,779 credits to dealers in 2014 which is down from the 17,664 credits issued in 2013.
  • Auto dealers and even publicly owned auto dealer groups did a bit better last year. Lithia had a profit of $135 million, Penske Auto Group profits were $305 million, Sonic shows $98.2 million, AutoNation shows $419 million and Group 1 Automotive shows $89.3 million.  Clearly some businesses know how to make money. 

  • While TrueCar indicates they have 9,000 dealers history tells us that not all of them are active in any given month or year

  • TrueCar exists because auto manufacturers and retailers do not have the will to initiate a concerted effort to improve the reputation of our industry or the customer experience and marketing process.   Studies still show that 92% of the public do not trust auto salespeople. 

  • Unless there is a systemic change TrueCar and other auto shopping sites will continue to exist and provide value to auto shopping consumers. 

 

 

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