TrueCar, KBB & Edmunds: an Objective View

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Comment by Larry Bruce on January 18, 2012 at 5:45am

I actually had a very interesting discussion with edmunds at the DDW workshop in Houston more info forth coming on that... Stay tuned 

Comment by James A. Ziegler on January 11, 2012 at 9:47am

http://domainnamewire.com/2012/01/11/truecar/

If you have any doubts that TrueCar is the Dealers' enemy, look at this. 

What does this have to do with domain names? Well, take a look at these domain names TrueCar just registered:

F*ckedbytheDealer.com
F*ckedbytheDealer.net
F*ckedbytheDealer.org

Comment by Jeff Kershner on January 10, 2012 at 9:29pm

Larry, actually I called out Edmunds.com back in June for taking this approach. We also highlighted their perpetual contracts - http://www.dealerrefresh.com/edmunds-tmv-vs-truecar-dealers-wake-up/

Once connecting the dots, it made sense why Edmunds.com decided to go direct to dealers with their leads. My guess was to obtain transactional data to help improve their TMV service.

Comment by Larry Bruce on January 5, 2012 at 8:43pm

Mike you are absolutely right in this case SIZE DOESN’T MATTER and they’re doing it too doesn’t cut it. The purpose of this post is to show that the systemic problem (dealers not handling data agreements properly) has this data now wide spread and others have been using it a lot longer.

Kudos to TureCar for at least having the “balls” to stand up and just say it, unfortunately for them they weren’t for the following onslaught.

I think there are a few ways TrueCar can handle this situation. Only time will tell if they take the advice they have been given and act accordingly. 

Comment by Mike Warwick on January 5, 2012 at 11:43am

Charles, how long do you think the tactic of "why are you picking on us, we're small" is going to hold water?  Anyone who understands how Truecar has positioned themselves in the market realizes that the "we're small" argument is ridiculous.  Truecar is gobbling up marketshare every day.  Kudos to you, by the way.  It will be interesting to see how the Yahoo agreement boosts your place in the market.  It seems like the "we're small" argument is PR spin until you are firmly entrenched, at which point you'll probably say, "we're the biggest game in town and we're not going anywhere."  I happen to agree with most of what you say regarding the need for dealerships to evolve into consultative selling.  I think it's clear that consumers will demand that approach moving forward.  Where we part ways is the way that Truecar limits exposure to only 3 dealers in a given area.  Why not list all dealers on the program within a defined radius?  Wouldn't that eliminate the perception of the "race to the bottom?"

Comment by Cole Matthew Mitguard on January 5, 2012 at 10:27am

Also thought that I would share this as the discussion is heading towards the reach of each of the three sites. Just did quick Alexa comparison using reach as the measurement (anyone unfamiliar with Alexa or this metric should click here). 

When all three are compared by Reach: 1. Edmunds 2. KBB 3. TrueCar.com

But what is also interesting is TrueCars growth over the past 3 months. 

Comment by Cole Matthew Mitguard on January 5, 2012 at 10:09am

Larry, I really like your concept of comparing the Edmunds, KBB and TrueCar. Did a quick pricing check for a 2012 Honda Accord Coupe V6 Auto w/Nav for San Francisco, below are the results. (Thought Honda would be the best brand due to option packages) 

Edmunds

TMV - $29,786

Invoice - $29,698

KBB

Fair Purchase Price - $30,597

Invice - $29,698

TrueCar.com

Great Price - $29,042

Factory Invoice - $30,017

Market Average- $31,092

   Admittedly this is not enough of a sample size to draw any true conclusions, but it is interesting that if TrueCar.com did not offer the "Great Deal" option (which is the feature that really distinguishes TrueCar from the others) and instead displayed just the "Market Average Price", which is more similar to the TMV and FPP prices, that it would be the highest of the three. 

   Don't know what this demonstrates is anything at all, but thought it would be an interesting test. 

Comment by Charles Kim on January 4, 2012 at 6:09pm

(continued)

• Provide a lower New Vehicle PNVR Marketing/Advertising Expense to dealers versus national dealer averages for Certified Dealers...but if you're a sales consultant, internet/BDC manager, or sales manager, I can understand why this could be an issue for you, but I also know why dealer principals do what they do too when it comes to accounting for the $299 fee and benefit the total dealership as a result.
• Improve sales velocity and departmental profitability for Certified Dealers
• Improve CSI by helping to solve two fundamental issues in the sales process that dealers have overwhelmingly never been able to solve to a customer's satisfaction (based upon research from JDPA and pretty much everyone else that has conducted similar research) while simultaneously helping to preserve dealer margins...a) lack of pricing context and b) overnegotiation due to lack of transparency
• Have no desire to eliminate dealers or sales consultants, both of which are ridiculous fear-mongering accusations...as I've said before, I'm a franchising expert who's signed more Sales & Service Agreement docs than everyone who's commented on a TrueCar post in ADM combined, so please stop raising this point because it is completely absurd.  That said, NO credible industry expert disagrees that the "traditional" sales consultant is a dying breed...that is a fact, as this critical customer-facing role is rapidly shifting to a more tech-savvy, customer service-oriented, and consultative role.  If you want to keep these folks in your showroom, good luck with that.

These are just some of the reasons why I firmly believe TrueCar, Edmunds, KBB, JDPA, Costco, CarWoo, CarPerks, AutoNation Direct, et al will never go away, and will all continue to grow and evolve because tens of millions of consumers and thousands of progressive dealers will never let that happen.  Why?  Because they all believe that we provide value to the industry and to both consumers and dealers alike.  Based upon my broad experience and expertise on every side of the industry (including as a car buyer), I agree with them.

So if you want to attack everyone out of principle as Larry has done, I can respect that and we can agree to disagree (I think Larry is wrong, and he thinks I am wrong, but we're getting a beer later tonight).  If you want to single-out the smallest player of the bunch (TrueCar) and ignore the "big fish" (KBB, JDPA, Edmunds, et al), that's your choice.  If you want to staunchly preserve antiquated ways of doing business, that's your choice.  If you want customers to conform to your way of business instead of conforming to what customers actually want/demand in rapidly increasing fashion, that is your choice too (though IMO, Millenials will literally put you out of business within 10 years if you stick with that plan).  But if you want to collectively work together to solve key fundamental issues in the sales process that customers absolutely hate and that none of you have remotely solved for to-date either, then let's work together on different ways to do that.

I go back to my challenge to find out who REALLY knows what's best for an entire dealership (versus what's good for one position or one department) and how best to get the job done.  NADA or NCM can pick several dealers with comparable performance issues and comparable improvement opportunities to participate.  I and any of TrueCar's biggest detractors will then pick dealership names randomly out of a hat and work with that dealership on an in-depth consulting basis for one year.  After one year, a panel of NADA or NCM consultants will evaluate the dealerships on New/Used/F&I/Parts/Service sales and net profit performance, and CSI.  Winner gets paid their consulting fee and earns bragging rights, while the others get paid nothing for time or travel, and the challenge results posted on every forum.  I will g

Comment by Charles Kim on January 4, 2012 at 6:09pm

I respect Larry...he's a friend and someone I respect greatly.  And while we disagree on a small number of things, he has principles because he knows that 1) TrueCar is the smallest player here, 2) the "big fish" like Edmunds and KBB have been doing this a lot longer than TrueCar, and 3) Larry is protective of dealer data from being used by ANYONE, not just one small player in the industry like TrueCar.

As I've said in other posts, Edmunds, KBB/AutoTrader, JPDA/PIN (the "big fish") and many others like them have NOT been targeted by the vocal minority like they have gone after TrueCar because our biggest detractors:

1. Are afraid to go after the "big fish," or
2. Are avoiding the "big fish" because of something to gain (e.g. speaking engagements, sponsorships, whatever)

 

IMO, I think it's probably a little of both.  Look at it rationally....last year, Edmunds impacted about 7 times the number of customers than TrueCar did; KBB even more than that; and even JDPA falls in this bunch too in terms of broad industry impact (positive IMO).  And each of them have FAR more dealers in their ranks than TrueCar does.  So why not target all the players collectively instead of singling out the smallest player on the block?

Regarding incrementality, the claim that TrueCar does not generate incremental sales for a dealer is simply false, but again, if you haven't run a dealership or worked in an OEM sales and marketing organization before, you probably wouldn't understand the true financial impact and dynamics of automotive market share to an OEM or dealership, or understand Tier 1/2/3 strategies as it relates to net profit and market share.

Regarding TrueCar leads allegedly resulting in:

"100's of dealers from NJ, PA, and even CA call me to follow up with me because they thought I was an internet lead.  These leads came from TrueCar."

...that is completely misleading and false, as no action from TrueCar could EVER cause this to happen.  Even Edmunds and others have validated this when we investigated similar claims.  If you think we're lying, then I guess Edmunds and other lead providers are lying too.  We're all a bunch of liars apparently!

As for TrueCar closing rates, overall, TrueCar closing rates are among the best in the industry largely because it is very far down the purchase funnel, unlike many content-oriented sites.  But if you've never managed a marketing/sales vertical or purchase funnel, then this probably would not make sense as to how this happens.

And at the end of the day, we:

• Have multiple business models in operation today (one of which could easily operate just fine in any state because it is a basic subscription model, but subscription and CPL models are just not as beneficial to dealers as a CPA model, hence why we don't just flick the switch to make the change)
• Have several product enhancements to be released this month alone (none of which are in Larry's presentation above) to address a handful of specific issues in the six states nationwide who have expressed concerns about one of our business models.  We have always been positive and proactive in addressing these concerns and will always be.
• Have massive (silent majority) support from partners, customers, dealers (5,000+ dealers who refuse to leave the program, and the record number of sign-ups in the past month sums it up), OEMs (e.g. key executives have contacted and visited with us to learn more about what we do and to see how we can do MORE business together to help them and their dealers), and heavyweight industry consultant support (Grant Cardone, Tom Stuker, Randy Brenckman, et al)
• Provide a lower New Vehicle PNVR Marketing/Advertising Expense to dealers versus national dealer averages for Certified Dealers...but if you're a sales consultant, intern

Comment by Keith Shetterly on January 4, 2012 at 8:16am

My bad, here's the right patent (that was also one of Painter's, just not for TrueCar)  http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITO...

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