TrueCar, not good deal in the long run

Discussion in 'General Chat' started by BruceK, Dec 11, 2015.

  1. BruceK

    BruceK Active Member

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    Perhaps you are aware of TrueCar, you've seen the TV commercials or even visited their website.

    They claim:
    It occurs to me, without them directly saying it, that this service is basically designed to let "the meek or lazy" car buyers ride the coattails of "the hard-nosed, tough, and shrewd negotiator" car buyers to avoid getting ripped off when buying the same car models.

    Now, assuming TrueCar has some level of success and gains more and more people who follow it and believe their "honest and fair" prices are the best deal they can obtain, there will be fewer and fewer buyers acting outside of TrueCar who are actually negotiating those lower prices for the huddled masses.

    Of course, not everyone in the market will follow TrueCar, but as more and more people do, the net effect will be just what the dealers (which, they clearly state, are their partners) want all along - higher sales prices.

    Following that, at some point, there will be no benefit in using it.

    .
     
  2. Friskie

    Friskie Well-Known Member

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    #2 Friskie, Dec 11, 2015
    Last edited by a moderator: Dec 11, 2015
    Many years ago, negotiating with a used car salesman, my co-pilot kept tossing out counter offers. I just sat there enjoying the fireworks. The salesman disappeared for a few two or three times for 'advice' but one time he left without his paperwork and we noticed on it a scribbled comment: "Put away your gun Calamity Jane". Calamity done us good on the price, too.
     
  3. whaap

    whaap New Member

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    I have a friend who is a retired car salesman. His last job was selling new Toyotas. He said a good negotiator could beat the USAA and/or Costco prices. I'm sure the same thing would apply to True Car. However, if a person is not a strong negotiator those prices are better than a stick in the eye.
     
  4. cct1

    cct1 Well-Known Member
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    I just bought a new car, and when scouring the internet for price information on both the car and my trade in, stumbled across TrueCar. The price they advertised was way, way inflated. I contacted 5 dealers with a price on what I'd pay for the car, and what I would accept on the trade in (basically went a little higher than the lowest number I was seeing on the new car, and a little lower on the highest number I was seeing on the trade in--the numbers were fair), first one to match those numbers gets my business. I probably could have gotten even better numbers, but they were good enough, and although I don't want to be gouged, I don't want to be unrealistic toward the dealer either. 3 of the dealers were really, really bad, one was basically false advertising. One dealer probably would have been ok (in fact I might have done a bit better on prices there, nothing dramatic though, but I had the deal with with the other remaining dealer in a few minutes, and I didn't want to break my word). One phone call, 2 emails, done. And several thousand dollars less than what TrueCar was spouting out.
     
  5. mrntd

    mrntd Well-Known Member
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    Most people don't like to haggle on a car. For them there are car buying services and things like true car. I use to have a business like that in college. Fast way to make some beer money
     
  6. cct1

    cct1 Well-Known Member
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    Thing is, you don't have to haggle. Research it at your leisure, come up with a fair price, and it's either yes or no. If you're price is fair, someone somewhere will take it. I don' t haggle at all, haven't done it in years.
     
  7. BruceK

    BruceK Active Member

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    I think it's important to remember that while TrueCar may help some purchasers, it is ultimately a tool for dealers to be fed a reliable stream of customers who are ready to buy and won't be spending/wasting their time haggling about a price.

    My point is that as more people that use the TrueCar service, there will be fewer hagglers, and consequently the transaction price of the vehicles will grow higher. It's a dealer's dream come true.
     
  8. cct1

    cct1 Well-Known Member
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    If people get that lazy, it's their own fault. It's not too hard to get a dealer invoice and go from there...

    As long as there is consumer reports, etc., there will be people still working toward reasonable prices. Unless TrueCar becomes some magical entity slanted in the consumers favor, people will continue to shop around and haggle--these are high priced items that we for the most part put a lot of thought in purchasing. I don't see it getting to the point where people will take any one single entities voice as the final say on such a large and infrequent transaction.
     
  9. Nathan

    Nathan Founder

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    It's not that great for the dealers. Reading the industry news I've learned TrueCar charges 299-399 for each contact that leads to a sale. Lets look at CCT's interaction.

    He, in his own words, stumbled across TrueCar. However he went on and did his own thing. Now if the dealer he ultimately bought the car from is a subscriber to their service TrueCar the lead and subsequent purchase are from them, and they'ed put their hand out to be paid even thought it seems as CCT did his own homework.

    Recently, Autonation, the country’s largest new-car retailer dropped the service. The biggest issue in the dispute: TrueCar demanded that AutoNation share all of the retailer’s customer information for all of its transactions, not just TrueCar-related deals.

    That would mean turning over information covering a laundry list of 41 data points on the approximately 550,000 vehicles sold by AutoNation annually. Of those sales, AutoNation attributes just 3 percent, or about 16,500, to TrueCar.

    For TrueCar, losing AutoNation as a customer is the latest blow in a series of high-profile challenges. The company is facing multiple lawsuits filed earlier this year by dealers, shareholders and the California New Car Dealers Association. TrueCar had rebuilt its dealer roster after nearly folding in 2012 when regulators in multiple states accused it of violating a variety of advertising and brokering laws.

    Full article - http://www.autonews.com/article/20150709/RETAIL/150709862/autonation-drops-truecar-in-contract-dispute
     
  10. Minidave

    Minidave Well-Known Member
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    When you see GM advertising $10 grand plus off of sticker, I don't know how much better of deal you need to get.....

    People don't recognize what these giant discounts do to resale value......
     
  11. cct1

    cct1 Well-Known Member
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    I guess that matters if you buy a car for resale value. If you get a huge discount up front, and lose it on the back end, you've actually done better than if you do it the other way around, from a financial standpoint. That money you save up front is money you can use immediately--invest, use if you need it, whatever. The only way it kills you is if it affects resale value disproportionately to your discount.
     
  12. Minidave

    Minidave Well-Known Member
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    I guess I wasn't clear....what does it do to the resale value of those who bought a vehicle just before the discounts applied?

    In the GMC example above, it just dropped another $10K thru no fault of yours....other than you bought a week too early or something.

    But all GMC trucks of that type are now worth $10K less.......

    something similar happened back in the day with Mercedes 300 series cars, the new models came out $6k less base sticker price than the previous year's models, the guy who just bought that last year's model and though he got a great deal? Not so much now......

    The best thing that could happen to the car industry is if everything sold at sticker, then people would buy on the merits of the car instead of the "deal"...
     
  13. cct1

    cct1 Well-Known Member
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    The value isn't going to drop 10k because someone got a deal 10k lower than yours, the car depreciates the second you sign the paperwork. It will cause the car to depreciate more, but not the full total of whatever discount someone got, it doesn't work that way.

    Saturn tried your strategy. How are they doing now? If you let the dealer set the price, that's a one way bargain, and you have no leverage. In utopia, maybe a dealer would set a fair price, but we live in a capitalist society, and that's not going to happen, nor should it IMHO.
     
  14. Nathan

    Nathan Founder

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    Saturn did not fail due to the pricing strategy. Saturn failed because of a management change at GM and the UAW. They wanted to bring Saturn in line with the GM and UAW way of doing things. The parts sharing, the universal labor contracts. The same basic tenets that eventually were the downfall of the monolithic GM.

    Thats the Forbes take on the matter. - Forbes Welcome

    Now the Harvard Business Review takes a different view on the matter saying that Saturn was a mistake from day 1. - https://hbr.org/2009/10/weep-not-for-saturn-the-brand

    The early years at Saturn could almost be compared to the early years of MINI. When owners were also engaged with the company and the company was also engaged with the owners. There are comparisons that make sense...

    Saturn used it own parts - So did MINI. When the later models of Saturn started parts sharing in the GM parts bin the cars started to less desirable. Et tu MINI?

    In the 1st generation Saturn demand outstripped production. MINI as well. Then the 2nd generation came along. Saturn was stuck with their pricing model, MINI on the other hand had to offer 0% financing and attractive lease deals.

    Saturn created a culture of excellent customer service. so did MINI dealers, at first. Now look at how many that were once friendly to clubs have closed that avenue.
     
  15. cct1

    cct1 Well-Known Member
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    Nah, it was all the pricing strategy, the rest of that stuff, labor costs, part sharing, etc were just a mumbo jumbo of minor nuisances....:D
     
  16. Minidave

    Minidave Well-Known Member
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    Actually, the market will take note of the price drop and adjust accordingly, cause it's not just one guy that got the deal, it's a nationally advertised campaign, thousands and maybe tens of thousands will get the deal nationwide, and Black Book and the auctions will adjust accordingly as these cars hit the market used in a short while.

    I was in the car bidness for 30 years......BTDT.

    As to the pricing, you completely missed the point, perhaps because you are one of those who buys the deal first, then the car.

    It's more understandable today than before, because there is so little to differentiate one car from another today.
     
  17. Firebro17

    Firebro17 Dazed, but not Confused
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    ^^^ One of my main reasons for choosing to park a Jaguar, over a Beemer, in my garage at this point in time. I chose the bigger bang for the buck...
     
  18. cct1

    cct1 Well-Known Member
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    Um, no. I chose the car first, then research what others are paying for it, then come up with a reasonable price. The vehicle I just purchased was a Sequoia, a low volume relatively high priced vehicle with little wiggle room on a deal.

    If I bought the deal first, I'd have gotten a Tahoe. (And that's not a slam on Tahoe's, the new ones are fantastic, in many ways better than the Sequoia, but the Sequoia fitted exactly what I wanted).
     
  19. Zillon

    Zillon Well-Known Member

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    Truecar is awful.

    I say this as someone who has used it and someone who deals with customers who use it.
     
  20. Zillon

    Zillon Well-Known Member

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    You couldn't be farther from the truth.

    TrueCar customers are the same customers that would've beat your balls around in the negotiating process anyway. It's just another tool for them to use.

    Additionally, for a dealership to be a 'TrueCar dealer,' they need to pay TrueCar money. So, you're losing money there, losing money on the front end of the deal by discounting the car, and you're losing again when TrueCar doesn't significantly increase your sales volume. Been there, done that when we tried to implement a TrueCar pricing strategy at a dealership I worked for. It's just another weapon for the customer to utilize, and in the end it's costing you more money than just being aggressive on pricing anyway.

    That all being said, the negotiation process used in the car-buying industry is outmoded and needs to be eliminated. Like all other purchased goods, cars should be sold on their merits, and not how much of a discount is given.

    Otherwise it all just ends up being a race to the bottom where nobody wins. Because of bigger discounts, both by dealers and by manufacturers, purchased vehicles lose value quicker, the car industry suffers from diminishing profits, and because of the lack of profit that can go into improving the product, technology then stagnates, and we all lose.
     

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