ADM serves Car Dealers, Automotive Marketing Pros and Internet Sales Managers
Whether you like it or not, TrueCar.com says they are all about truth and transparency for the car-buying public.
The benefit of transparency for the car buyer is that he or she can learn what others actually pay for a new vehicle -- plus, he or she can locate where the dealers are who price his or her next car favorably in relation to the competition.
The benefit for the dealer who advertises on TrueCar.com is in being where the buyers are. Marketing to potential buyers with an upfront, haggle-free price also conveys a hassle-free buying experience. Which is further recommendation for the dealer who shows favorably on TrueCar.com, their open partners and their member-affiliated groups.
After seeing that the Colorado state regulators announced today they will be enforcing tighter compliance with the rules that car dealers must follow when advertising pricing, among other things, I wondered what a Colorado car shopper sees when researching a new vehicle on Truecar.com.
Below, I selected a typically configured and readily available new Chevrolet, a 2012 Equinox front-wheel drive LS with standard features, listing at $24,260 MSRP.
According the the chart below, the average sale price is somewhere between list price and invoice, while the three recommended "highly rated certified" TrueCar.com dealers are offering this model at invoice (the nearest dealer) or $250 below (the other two dealers nearby).
Those three price quotes are good deals, compared to the range of actual transaction pricing TrueCar claims to have evidence of, glancing at the bell-shaped curve. The next chart, below, shows the same reference points with a bar chart replacing the evenly distributed bell-shaped curve, this time showing 1,159 purchases in the last 90 days in the region (you can drill down to a local sample or zoom out to a national data set, as well). This is an adjusted data set, to the best of my knowledge, for option content and relative pricing, since not every Equinox sold was a basic FWD LS.
Those price quotes of $23,307 and $23,557 are representative of some of the best actual transaction prices measured, according to the chart.
Point is, in Colorado state regulators may influence how future offers on TrueCar.com may comply with state law with more precision and more thorough disclosures, but essentially car buyers are already getting "true," realistic information.
There's something else going on in other parts of the country. You can create the chart below, by searching for the same 2012 Equinox in Maryland. The listed MSRP is the same, but the reported invoice differs by a little, $23,439 vs. $23,557. What's remarkable is that the offered sale prices by the three "highly rated certified" dealers are quoted as $22,645, $21,839 and $21,490. Maryland buyers are getting great prices, aren't they?
Or are they? According to TrueCar.com, in a survey of what others actually paid in this region, out of 1,592 vehicles purchased over the past 90 days, not a single one was sold at $21,490. How many were sold at the next lowest offered price of $21,839? Zero. Any Chevrolet dealers willing to share how you sell an Equinox $2,000 below invoice? Trick question, since there aren't any.
A reported 14 sale transactions out of the 1,592 in the region, less than one percent, are in the lowest existing component of this bar chart, which is between $22,546 and $22,743 -- the segment in which the highest of the three TrueCar.com dealer's quote falls.
You can draw your own conclusions, as to the quality of the customer experience, when a potential buyer approaches that low-priced dealer, expecting, as the TrueCar commercial promises:
"First, TrueCar.com shows you what others actually paid for the car you're looking for. Then, TrueCar.com finds you an even better available price!"
I'm not quite sure what that even means. Are you?
If Colorado state regulators are parsing what compliance should be all about for their TrueCar.com affiliated dealers, what should state regulators in Maryland take issue with?