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An Intertview With Scott Painter, CEO of TrueCar

Yesterday I conducted an interview with Scott Painter, CEO of TrueCar.  I asked him some tough questions and he candidly provided the answers. Answers that I didn't always agree with, but he did answer my questions.  I commend Scott Painter for reaching out to people like myself and Jim Ziegler. 

There is no doubt that Mr. Painter is very passionate about his business.  He believes in what he is doing and he's defending his vision, and I can't fault the man for attempting to defend his company.  I would do the same if it were Phone Ninjas being attacked in the court of public opinion.

Since I took on the role of interviewer, I feel it's only fair that I allow you all to digest and analyze the conversation between Scot and I.  You'll see that Scott and I often agree that we disagree with one another on many of the issues at hand.  The interview lasted over an hour and it could have continued on for another hour. Unfortunately we did not take a deep dive on the data issue, but it was briefly discussed. 

Here is the first 58 minutes: http://www.callmeasurement.com/review_x.cfm?cid=349325072&lid=3...

The call got cutoff and I called back: http://www.callmeasurement.com/review_x.cfm?cid=349326841&lid=3...

At the end of the day I can tell you that I do not like what TrueCar represents or what it could potentially do to the automotive industry.  As far as Scott Painter, I respect him as an adversary.  The man has a plan and he's executed on that plan.  You can't fault the man for following his dream.  The question is, "will the manufacturers and dealers follow that dream as well?" 

Myself, I see one of two things happening.  The TrueCar revenue stream evaporates and they disappear (less unlikely), or Truecar gains momentum and they become a dominant player in our industry.  At that point, manufactures and dealers might as well adopt once price shopping and eliminate the middleman.  So either way, I do believe TrueCar will have a lifespan that much resembles their own bell curve.

With a busy travel schedule between now and the end of the year, I may not be as active on the forums as I would like, but know that I still support our cause.  "Kill the Beast!"

Now a quick advertisement from your sponsor:

I will be in Colorado next week teaching the ways of the Phone Ninja!  Hope to see you there:  Phone Ninja Training

I'll also be joining the Alpha Dawg for Internet Battle Plan VIII in January.  This is going to be a must attend event.  See details here: Internet Battle Plan VIII

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Tags: Jerry, Painter, Scott, Thibeau, TrueCar

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Comment by James A. Ziegler on December 21, 2011 at 4:34pm

KANSAS AUTOMOBILE DEALERS ASSOCIATION
 

 

 

IMPORTANT NOTICE: Brokering Prohibition – True Car/ZAG

 
To:      The Members of the Kansas Automobile Dealers Association
 
From:  Don L. McNeely, President
 
Various models for motor vehicle sales programs have brought increased attention on marketing practices in Kansas and across the country.  Commentators have most recently focused upon such programs as that offered by TrueCar/ZAG though there are many forms under which a dealer may be functioning, particularly in online arrangements.  This comment will focus upon how such programs can actually unwittingly or otherwise set you up for possible violations of the Kansas Dealers and Manufacturers Licensing Act, particularly those declaring motor vehicle brokering illegal in Kansas. 
 
It is KADA’s opinion that the manner in which programs such as that offered by the True Car program as it is currently structured and being offered in our state do in fact violate the Kansas brokering prohibition.  This is particularly so as it relates to a dealership paying a direct marketing fee, which can be likened to a commission, for each vehicle sold. While it is not unlawful to pay an annual or monthly advertising or subscription fee for vehicle leads, it is a violation of the Kansas brokering law to pay a third party a fee—or other benefit--for bringing buyer and seller together.  
 
It is our understanding that a number of Kansas franchised new car and truck dealers are currently doing business utilizing the TrueCar/Zag format.  It is also our understanding that several formal complaints have been filed with the Kansas Department of Revenue’s Division of Motor Vehicles requesting an investigation of those dealers who have been identified.
 
As a reminder, the Kansas broker prohibition statute was enacted in 1990 and was ultimately upheld by the Kansas Supreme Court in 1992 (Blue v. McBride).  K.S.A. 2010 Supp. 8-2404 (q), (r), and (u) which respectively pertain to new and used vehicle brokering describe prohibited and allowed practices and exceptions (display, advertising, soliciting and acting as a broker).  These are also discussed and tempered in the McBride case to allow for the free exchange of information, but one must still keep in mind that brokering practices are squarely prohibited.  
 
You have to pay attention to the laundry list set forth in the law.  It defines a broker to be any person who, for a fee, commission, money, other thing of value, valuable consideration or benefit, either directly or indirectly, arranges or offers to arrange a transaction involving the sale of a vehicle, or is engaged in the business of (1) selling or buying vehicles for other persons as an agent, middleman or negotiator; or (2) bringing buyers and sellers of vehicles together, unless excepted.  (See K.S.A. 2010 Supp. 8-2401(x).)  As you can see the arrangements that are prohibited forms of brokering describe many elements of the TrueCar program which you should review carefully before engaging in such practices. 
 
Another thing we have heard expressed about marketing arrangements are concerns related to legal issues of privacy, data use and ownership, as well as data access, particularly where a dealer has given outside access by a unrelated third party to its DMS system.  The TrueCar/ZAG structure serves as a significant example of the issue.  It collects transactional data from supposedly various sources to determine “the right price” to pay for a car.  Vehicle pricing points aren’t necessarily the only issue, though.  KADA is of the opinion that this can be ve

Comment by James A. Ziegler on December 16, 2011 at 12:25pm

Okay Honda has taken a courageous stand and banned TrueCar pricing with it's dealers. I know for a fact VW is strongly considering doing the same. I hope VW realizes that they've just began to get some incredible momentum in the market AND now is NOT the time to allow an invader like truecar to devalue the brand in the public's eyes. No matter what you sell, TrueCar cheapens your brand.

Group 1 made sure their dealers cancelled after looking at the exposure of having these people rooting around in their DMS, especially with AutoNation's CEO on the board of Truecar...

Group 1 was smart enough to see the writing on the wall and run as from away from these people as possible. When is Asbury, Penske, Sonic and others going to awaken and realize they people appear to be a huge threat? Even large private groups like Rick Hendrick should be looking at the evident danger we're all perceiving here. 

Where are FordGeneral Motors and especially...where is Toyota in this escalating skirmish? I am embarrassed that mark Reuss, president of general motors would actually go to TrueCar Headquarters and play with Painter showing him a 750HP Camaro.

I did not mention Nissan because their dealers are using Truecar to sell way below invoice so they can collect stair step money. You guys are smiling now BUT if Nissan takes away the program, you're screwed royally because of the benchmarks you set with TrueCar making your brand image "Ultra Cheap Nissan"

Does Mark Reuss NOT understand that his dealers are being raided by these people cheapening the product down to unprofitable and below? I find it hard to believe that Reuss would publicly suck up to these people if he truly understood.

There are a few investigations of TrueCar popping up here and there AND we're still urging dealers to put more emphasis with your dealer associations to get off of the sidelines and represent us... I know a couple of associations are doing their best while others limped off of the battlefield without firing a shot...  weak. 

I am especially disturbed about Toyota staying quiet while Honda takes a stand. It's like sending a message that Toyota has less value. 

This thing will gather increasing momentum and I predict TrueCar will find some high-profile weak suck who will sellout their integrity for the publicity or hard cash and take a stand publicly backing them and betraying dealers.

Of course, this is all a lot of conjecture, speculation, supposition and opinion...I might be wrong. :)

 

Comment by Stan Sher on December 15, 2011 at 8:18am

I am listening to the call right now and it is exactly how the call went with me.  We had similar questions and the answers were exactly the same.

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