What exactly is TrueCar? That's the question behind recent conflicts between the company and a growing list of foes, which include dealership organizations, automakers and regulators in at least three states.

According to a report by Automotive News, TrueCar's business model is under fire by this old guard, backed by long-standing legislation to protect their franchise interests. AN says government officials in Colorado, Wisconsin and Virginia have all raised issue with TrueCar, and that the company may face legal problems in other states, including California. TrueCar has responded by promising to make "meaningful changes" to its service by the end of the year, according to the report.

Nominally, TrueCar is an "Internet marketing company" that profits from the fees that dealers pay when they sell a car that was listed on TrueCar. But that practice may not be legal, especially in states that have consumer protection laws against brokering and what is known as "bird-dogging," or paying third parties for leads. There are also issues with TrueCar's marketing, which could be in violation of some state's rules prohibiting the mention of invoice price. Dealers who do business with TrueCar may risk steep fines or loss of license in some jurisdictions, but from what the report says, most regulators are putting businesses on notice first.

TrueCar has also raised the ire of at least one carmaker, with Honda recently reminding its dealers that if they want to get money through its dealer marketing program, they'd better not be advertising cars for below-invoice price on TrueCar.


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  • 45 Comments
      Ben
      • 3 Years Ago
      I know reading is tough for some people, but this isn't about TrueCar giving out the pricing information. It's about dealers paying them for the "leads". Dealers are buying your information and buying a recomendation from TrueCar which is "bird-dogging".
        plarson79
        • 3 Years Ago
        @Ben
        There are several other company's that do the same thing. Dealers have to pay for leads they receive. However, in the case of TrueCar, the dealer only pay's when they actually sell the car, and that fee is rather steep. To be a competitive dealer using TrueCar, you have to be priced so far below invoice, and then pay TrueCar for the sale. Using their service may help you sell more cars, but all sales are at a pretty big loss. I understand why Honda does not want their dealers participating in their service. The only reason dealers use the service is to sell more cars, but sales through TrueCar are not profitable. Being a dealer that is signed up with them for about a year now, I would know. Our group is considering dropping their service because the results are not all that stellar and there there is absolutely no profit in it. For the consumer, the service is excellent. You get an awesome deal on a new car.
          Ben
          • 3 Years Ago
          @plarson79
          I've turned away almost all of the truecar pricing sheets that Ive came across, only to turn around sell them at OUR pricing when they found what they wanted was unrealistic. I may be wrong but Im guessing you live in a state where bird dogging is legal?
        Stephen Meade
        • 3 Years Ago
        @Ben
        Just curious...and what's wrong with that? Salesmen also receive compensation for leads; it's called commission. Frankly, I have a feeling that the average TrueCar lead price is cheaper than the salesman commission. The car business is very unique in the sense that, unlike other products, there is a very vibrant third-party assessment system. I believe there is a place for qualified salespeople, but I have never met a single one that knew more about the cars than I did upon walking on the lot. I have no problem paying for great service, but why should I pay for not-so-great service? TrueCar provides a no-hassle buying experience for consumers who know what they want and don't want a hassle. I own a real estate company and commissions on real estate sales in my market are substantial. There isn't a day that goes by that I don't think about what more we could be doing for our clients.
          Ben
          • 3 Years Ago
          @Stephen Meade
          It's not a right or wrong question. Its LEGAL vs ILLEGAL. When was the last time you paid a finders fee on a home purchase. In Wisconsin its 100% Illegal and that's whats being challenged. As a dealer is WI I'm in full favor of it, I wish I could bird-dog I would sell more cars, but that doesn't change the law.
          tinted up
          • 3 Years Ago
          @Stephen Meade
          Not all dealerships do mini deals at $100, some are sometimes more. In my selling history there were days that I would juggle three deals at once and sell all three a car. Take home pay is sometimes zero for a day, but it can also be a couple thousand.
          TruthHertz
          • 3 Years Ago
          @Stephen Meade
          You don't meet super educated sales people because nobody is making tons of money anymore due to the internet changing the market. Smart people either left the business or run the dealers. A TrueCar deal only means $100 to a sales person and there is no guarantee for a good survey (which usually affects their pay plan). Would you work all day with someone for a $100 if you were really smart?
          O6VistaBlueGT
          • 3 Years Ago
          @Stephen Meade
          Stephen, how much do you think a salesperson makes on a "TrueCar" sale? I will tell you, its what is called a "mini" or "mini-deal" which depending on dealerships ranges from as little as $50 to maybe $200 BEFORE taxes are taken out at the end of the month. So to answer your question, the TrueCar lead is more expensive on what the salesperson will make. How do I know? I've been selling Fords for over 15 years and am a regular contributor on TheMustangSource.com for advise on ordering/buying Mustangs.
        desinerd1
        • 3 Years Ago
        @Ben
        That is just a loophole they are using to put restrictions on TrueCar. The real intent is to keep consumer misinformed about the true price of the car.
          Ben
          • 3 Years Ago
          @desinerd1
          Bird-Dogging isn't a loophole, its a law. Trust me, if it was legal to do dealerships would benifit way more than consumers.
      TruthHertz
      • 3 Years Ago
      TrueCar is a derivative of ZAG which is an organization that sells leads to car dealerships. Unlike most lead providers that are on the internet that charge on a per lead basis, ZAG charges on a per sale basis. This means that if the customer doesn't buy, they don't have to pay for the lead. This fee is usually around $300 at this time. In the past it was lower at $200. TrueCar pricing IS NOT BASED ON THE MARKET but what PARTICIPATING DEALERS log in and say they are willing to sell a vehicle for relative to the invoice price for a given model and trim. That said, their little chart that they show is just what PARTICIPATING DEALERS say and not what the actual market is doing. This can be misleading to consumers. There are other dealers out there that may be higher or lower and that would make the pricing look more or less attractive. An example, some cars are predominantly sold in FWD trim and there is an optional AWD version available. Usually the AWD versions sell well in colder climates and the FWD models sell well everywhere. Dealers in northern states usually charge less for AWD models because they stock these vehicles and there is competition from surrounding dealers both inside the same brand or for other offerings. In the southern states, someone may be looking at one of these vehicles and think they aren't getting that great of a deal by looking at the silly TrueCar chart. In actuality, they TrueCar chart is inclusive of the entire US and not the radius that the customer selected. Unless the customer would be interested in driving 1,000 miles to another dealer (not disclosed), the imaginary price listed as the lowest price on their site doesn't exist. TrueCar simply needs to reform their business model. Their statistics need to come from actual sales and not what dealers "say they will do". They need to do away with the $300 fee and charge on a per lead basis like everyone else (that is doing business legally). TrueCar could raise fees another $300 and then raise vehicle prices accordingly to offset dealer costs. The potential for the customer getting screwed is enormous if their model isn't adjusted. How many times have you gone to a dealer with a quote only to find the car loaded with "dealer installed accessories". This may be splash guards, wheel locks, window tint, window and sunroof deflectors, paint sealant, interior fabric protection, ect... Dealers that use the TrueCar system and do deep discounts usually equip every vehicle with these items. TrueCar dictates that the customer must take delivery from dealer stock and not a dealer trade in order to receive the quoted price. It also says that dealers may have installed options that would affect pricing. The reason for that clause is to protect a dealer from giving away a DVD player installed in a vehicle that was not originally from the factory. Instead it allows for dealers to do what they do best. Bait and switch. Something needs to change.
        theking
        • 3 Years Ago
        @TruthHertz
        But the Truth is that the dealerships are doing it to themselves. When you use TrueCar(ZAG) the dealer can see what the lowest price is on a model wit in 100 mile radius. Not which dealership just what the lowest price is. So the next dealer says "I will offer it at $100 less and so on and so on until you get to a point where there is no where to go.
      Eddie Strack
      • 2 Years Ago
      TrueCar is not necessarily a poor priciple in the fact that it guides consumers to a low price. Shame on the sales professionals and dealerships who have lost the idea of customer service. This is the main reason why TrueCar has flourished... On the other hand, consumers need to remember what dealerships return to their local and regional economies: jobs, charity contributions, jobs, products and services the general public cannot produce (licensing fees, franchising, etc.), jobs-catch the hint. To employ people and for those to make a living to invest their hard-earned money into the local and regional economies. Note-try making a living selling cars and see what your perception is then. In fact, before you start complaining about bad service at a restaurant, try doing that person's job. I have many friends who have tried and now respect the jobs of people who deliver service-it has changed their perception. This again is not one dealer or salesman's fault, but the industry as a whole. Think Wal-Mart: one family is now the richest in the world for putting thousands of small businesses out of business that would otherwise still be investing in their communities. Mark my words, TrueCar will do the same for the auto industry... Dealers cannot continue to sell at and/or below invoice and stay in business-TrueCar's pricing competition has already done this to several reputable businesses and I can only hope to say that it will not continue. ***Side note:yes, I am a sales consultant that is passionate about my professioon. Yes, I sell my customers cars with the hopes of feeding and clothing my family and providing them a home to live in. Yes, I have sold cars to customers @ TrueCar pricing and taken a 30-70% decrease in my pay to do so. And I have only sold cars for less than 1 year... Do I sell every car for those ridiculous prices-NO! But I will always treat my customer fairly and deliver excellent customer service every time. Let me finish this post with the following: I challenge any one of you who would consider a reduction in your pay of 50% in any field, who earns your wage earnestly and tell me you are okay with that. Who would put their family on the streets by doing this or who would do the same to someone is fair, honest and hard-working and put them out on the street... not this guy! ~~~~~~~~~~Selah
      Autoblogist
      • 3 Years Ago
      First NDAA, now this. Free market capitalism is good until it benefits the consumer. This country is so fu*cked.
        tinted up
        • 3 Years Ago
        @Autoblogist
        In a FREE market, dealerships can CHOOSE to use the service or not. If said service has NO place in the market then NO dealerships will CHOOSE to use the service, forcing them out of business.
      phillip
      • 3 Years Ago
      This is bull! This website was trying to fight first rate price discrimination and was a boon to consumers. Buying a new car should not a a frieking shakedown barter system. Every customer should pay the same price! If every customer paid the same price then there would be no need for something like this
        Esher127
        • 3 Years Ago
        @phillip
        Agreed. Remove the barter system, make dealer add-on stickers illegal (FREE oil changes! FREE inspections! FREE wheel locks, mud guards and window etching! For only $2000!!!) And the need for this site mostly goes away.
      pricehub
      • 3 Years Ago
      In the very near future, price transparency will come to the auto industry. With more and more car pricing information available online and the ubiquity of mobile apps that can give consumers instant access to this information while physically at a dealership, the days of the dealer taking advantage of un-educated consumers is quickly coming to an end. Just like the Amazon 'price scan' app that lets you scan a barcode of a product you want to buy while standing in the aisles at Best Buy, access to timely, real information will level the playing field between car dealers and consumers. Dealers that will survive in this new age will be the ones that embrace transparency, not the ones who fight to keep the old way of doing business. The democratization of information has changed (and is still changing) every other industry, autos will not be far behind.
      EJD1984
      • 3 Years Ago
      TruCar is a ripoff. I was looking for a new Jeep Grand Cherokee here in Maryland (Baltimore), and I thought I had found a great deal on a 4WD Laredo, 26K new. I drove up to the dealer on a Sunday to look at the vehicle (had the stock number with me), and when I did find it, the 26K was the BASE PRICE, not the actual 32K for the vehicle with all of the factory options. I though that maybe this was a one time anomaly, and I looked for a Charger RT AWD, same results at a totally different dealership!!!
      RocketRed
      • 3 Years Ago
      Basically, dealers want to maintain the model whereby the consumer knows nothing about the market price for a car and the dealers tell them lies about what that market price is. Sounds like a good case for the government to step in and regulate---to remove the information asymetry in favor of dealers, not reinforce it. The whole invoice price issue is a red-herring. Like all consumer goods, cars sell at the price the market will bear. What do I care what price the dealer paid the manufacturer for the car, net of hold-back, incentives, bonues, whatever? If I know the car sold for 25K 10 times last month, which TrueCar will tell you, that is probably the market price. That's where you start negotiating, not at "MSRP," and there is no need to listen to whinging about how the dealer has to make a profit.
        RocketRed
        • 3 Years Ago
        @RocketRed
        I did not know that the transaction data comes only from participating dealers. But that tends to reinforce my view, because the dealers have no incentive to report sales that are below "invoice." As far as what my time is worth, I will spend a couple hours staring at a salesman. We once went in to get a car advertised at an "internet price." Surprise! the car was just sold and there were no others. So we got up to leave. At that point it turns out that another one of those cars was sitting out back, but was stickered at MSRP. Make a very long story short, we got the car for th at "internet price," which was more than 4K less than MSRP. I'm sure it was not even "invoice," but it was getting dark out by then. In any event, it was time well spent. As far as taking food from babies mouths, please, no more of that. At my dealership where I get my car serviced, their is a new black Porsche 911 Turbo parked out front. Belongs to the owner's son, I was told. I think they are doing just fine.
        wilkegm
        • 3 Years Ago
        @RocketRed
        Almost- sounds like a good case for the gov't to step OUT and DEREGULATE. True car impro es fair competition and the stealerships (who want their franchise interests protected) are willing participants. If not, a true car price is no more useful than an edmunds TMV. There are many things that piss me off about their fees, and the only way to go in there is with the best ammunition you can have. Let me see your war face
      Michael Silva
      • 3 Years Ago
      The fact is that the free market system is not working with TrueCar. It is forcing dealers to pay fees so the customer to go to that dealer and forcing the dealer to sell at a loss. This, in turn, causes the dealer to either: beat the customer up in finance to buy the "package" of paint protection, extended warranty, etc..., second, if any company is not allowed to make a profit, they go out of business, third, if they are giving the cars away, the back end has to carry the dealership, which in turns means raising the prices on services. The free market works well when an individual does their research and shops around. If an individual chooses, which is the key point, not to research their purchase choice, then, they pay what they agree to pay when they go down to any dealership. However, if a dealership chooses to rip all their customers heads off, the word gets around and they will suffer. The consumer has the power, not the business. All good running business realize that they must takiecare of the customer and givie them value for their money spent. Ones that don't , fail-look at Kodak and other car dealers that aren't around. Just my two cents, well, maybe only one cent worth.
        CanIGetAWhatWhat
        • 3 Years Ago
        @Michael Silva
        You're wrong, TrueCar isn't forcing dealers to do anything; dealers who wish to participate and become "haggle-free dealers" do so voluntarily. If they don't want to, they don't have to.
      IBx27
      • 3 Years Ago
      I just love the commercials where someone was about to pay an extra $10,000 for their car. If you go into a dealership and don't know the MSRP of a car, or are too stupid to look at the window sticker, you deserve to pay the extra $5k-10k.
      Shelton Stevens
      • 3 Years Ago
      I used TrueCar back in May to buy my car and it saved me a bunch of time and headache. I printed the coupon, went into my local dealer and asked if they could meet or beat this price and they said they couldn't. They saved me a couple grand.
      ELG
      • 3 Years Ago
      A great service that increases competition and allows consumers to get vehicles much cheaper than they would normally. Of course the manufacturers would make some campaign contributions and get it shut down. AOL has a similar service (which is sometimes cheaper than zag/truecar too) I wonder why it wasnt mentioned....
        TruthHertz
        • 3 Years Ago
        @ELG
        TrueCar acts as a middle man. TrueCar could tell dealers, "Hey we'll raise all the prices $400 if you give us an extra $200." This is because TrueCar charges the dealer AFTER THE SALE. Other lead providers just supply leads that will potentially generate a sale. These procedings are TO PROTECT you from a business model that COULD SCREW YOU. But as a typical uninformed consumer, you just assume this is just the evil dealerships converging against you...
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