ADM serves Car Dealers, Automotive Marketing Pros and Internet Sales Managers
Don't get me wrong. We are a TrueCar.com affiliate, and I am a true believer in the power of online transparency, so please don't think I don't appreciate their value as a marketing partner. In fact, TrueCar (formerly known as ZAG) leads have typically been at the top of our list of sales-producing third-party sources.
I wish we could sell every customer, but we cannot.
Often, the transparency of the data TrueCar.com shares with an online shopper is overshadowed by that Really Low Price Quote, and good, old-fashioned wishful thinking. We're talking quotes of $2,000 and $3,000 below what's really doable, in our view, but they are competing quotes, nevertheless, which we frequently contend with.
When an online customer prices a new Silverado, for example, on TrueCar.com, she or he gets three competing dealership quotes -- and this clear, easy to read bell-shaped curve of what actual transaction prices (sale price minus cash incentives) have been over the past six months, polled from real dealership DMS data.
On the USAA Auto Circle web page, powered by TrueCar.com, members can click on a link to "view what others really paid." If you do, you'll see a similar bell-shaped curve which graphs MSRP, invoice, the average price paid, plus the dealer cost with incentives subtracted, and the competing dealer prices quotes (also with incentives subtracted). This graph is real data provided by dealers; in this case, it is of 433 transactions in the past six months. TrueCar.com, and its affiliated marketing partners such as USAA, gets the data via participating dealerships who agree to give them access to real transactional pricing in order to participate in the program.
The screen shot above is a graph, with TrueCar.com competing price quotes along side, for a $37,070 MSRP Silverado. Did 433 customers purchase the same exact equipment on a $37,070 MSRP Silverado? Not really, but TrueCar.com adjusts the data relative to each vehicle's option content and price, for comparison purposes. I can live with that.
The main thing is, this graph tells tells your customer the way things really are, regardless of what that ridiculously low quote out there purports to be.
Point being, if customers were really purchasing at that $27,558 quote ($3,050 below the highest of the the three quotes, and $2,067 below dealer cost), why is that low, low price nowhere near the $31,784 average price paid? In other words, if that dealer, 107 miles away, readily sold comparable trucks at $27.5k, more or less, wouldn't buyers flock to them? As a matter of fact, that quote comes from a large-volume dealership (ostensibly the reason they can afford to sell so low). So, wouldn't their transaction prices have a strong influence on the market average? And since their nearby competitors would have to also price closely to sell anything themselves, wouldn't that market dominance further influence the average price paid in the whole region?
That $27,558 price quote is so far down on the left side of the graph, it's statistically insignificant. Chances are, it represents closer to 0% of the prices customers actually paid, than anything else. The bell-shaped curve tells the true story. Doesn't it?