Deep discounts? Not us, TrueCar now says
'Metamorphosis' aims to placate dealers, regulators
Dominique: It's no longer about the deal.
DETROIT -- TrueCar, which made a splash -- and alienated dealers and regulators -- late last year by holding out the promise of below-invoice prices, has dumped its deep-discount stance.
After a "corporate metamorphosis," TrueCar now de-emphasizes the deal on its Web site and simply tries to connect consumers and dealers, Executive Vice President Larry Dominique said last week.
On its Web site, TrueCar has stopped telling Web visitors that a participating dealer would "guarantee" a specific price that was below factory invoice. Now, Dominique told Automotive News reporters and editors, the site merely speaks of the possibility of below-sticker prices -- far less of a stretch.
The changes came this year after regulators in several states alleged that TrueCar's business model violated state laws governing advertising and so-called bird-dogging, or paying a third party a fee that is contingent on a sale.
Also, many dealers expressed concern that TrueCar's methods depressed transaction prices.
The new operating model puts TrueCar in line with rival lead-generating sites such as Edmunds.com and Cars.com.
Dominique, a former top Nissan executive who joined TrueCar in October, said the changes are bringing dealers back into the TrueCar fold.
After falling from 5,500 participating franchises early this year to 3,500 at its low, the company has rebuilt the number to 4,300, he said.
TrueCar was a hot industry story in January. Regulators and dealer associations in at least six states had said TrueCar's business model violated various state laws.
In response, TrueCar made numerous changes, such as offering subscriptions to dealers in states prohibiting bird-dogging rather than its core pay-per-sale model.
Under that model, still offered in 30 states, a participating dealer pays TrueCar a $299 fee when a TrueCar shopper buys a vehicle.
TrueCar also has revised its Web site to conform to state laws that prohibit, for instance, use of the term "invoice" in advertising.
TrueCar's strategy to de-emphasize discounts is still playing out. TrueCar, for instance, in about a month plans to drop the phrase "dealer cost" on its pricing display for consumers on its Web site.
Many dealers told the company that dealer cost, which TrueCar defines as the price of a vehicle before the holdback, incentives and other payments by automakers to dealers, also emphasizes discounts to shoppers. The holdback is typically 3 percent of the sticker.
TrueCar plans to resume TV advertising, but the spots won't feature consumers bragging about huge deals on auto purchases, as the original spots did. Dominique said. He did not say when the new spots will broadcast.
In January, TrueCar also raised industry eyebrows when it signed a deal to pay Yahoo! $50 million per year for three years to handle shoppers on the Yahoo Autos Web site.
Dominique said TrueCar and Yahoo are still working out details of the arrangement, such as which party controls certain content for consumers on Yahoo Autos. c
David Barkholz contributed to this report