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TrueCar seeks to add dealers

Yahoo tie-up expected to yield more sales leads


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Published by Automotive News
 
Scott Painter: TrueCar dealer sales of 500,000 in ’12

Jeff Kotlarek of Taylor Chevrolet in suburban Detroit expects a bump in vehicle sales from a new deal between search engine Yahoo and TrueCar Inc., an online car pricing and lead generator to dealers.

For nearly five years, Taylor Chevrolet has paid TrueCar $299 for each new vehicle it has sold from a TrueCar lead, said Kotlarek, the dealership's Internet sales manager.

He expects more leads now that TrueCar has agreed to pay Yahoo $150 million over three years to capture leads from at least 10 million auto shoppers who visit Yahoo Autos each month. The exclusive partnership kicks off Jan. 1.

To prepare for the volume, TrueCar intends to nearly double the number of its participating dealer franchises over the next year to 10,000 from 5,600 today, said TrueCar CEO Scott Painter.

Kotlarek says customers sent to Taylor Chevrolet by TrueCar account for as many as 15 vehicle sales per month. The store sells about 175 new cars monthly, he said.

"I expect the hookup with Yahoo will be another source of business," Kotlarek said.

Yahoo has guaranteed TrueCar.com at least 10 million unique visitors per month, but Painter said he is confident the number will be consistently higher.

For comparison, online shopping site Edmunds.com registered nearly 7 million unique visitors in September, according to Compete.com, an online audience tracking service.

$299 per new car

TrueCar allows online shoppers to build a vehicle to their specifications, then select from as many as three TrueCar-participating dealers to bid for the business with discounted prices. The TrueCar Web site promises shoppers "significant savings off of the sticker price."

If the selected dealer sells a vehicle, TrueCar collects $299 for a new car and $399 for a used car after the sale is completed. That's different from most third-party lead generators, which typically charge dealers $20 and up for contact information per prospect.

Kotlarek said he normally offers his vehicles to TrueCar customers at $100 below invoice price. But vehicle sales from TrueCar leads can generate a substantial net profit, he said, when customers buy accessories, warranties or features such as moonroofs that they didn't originally request.

TrueCar also has agreements with 110 large associations such as AAA and USAA that offer the discounted car-buying program to members. The affinity-group program had been known as Zag, but the name has been eliminated and the program placed under the TrueCar umbrella, Painter said.

With many prospective new customers coming to TrueCar through Yahoo, Painter has ambitious growth plans. TrueCar-participating dealers will sell 238,500 new and used vehicles through the TrueCar program in 2011, with 500,000 expected in 2012.

TrueCar is displacing Cars.com as Yahoo Auto's exclusive auto partner. Cars.com President Mitch Golub said in October that he wanted to shift the marketing effort to Cars.com's own Web site.

Painter is a serial entrepreneur who has started 37 companies over the past 23 years.

More leads

Painter sees no problem recruiting new dealers to provide greater geographic coverage for auto shoppers entering TrueCar's orbit through Yahoo. Moreover, a growing number of employers offering the TrueCar affinity program to their workers are expected to generate more leads. That total is about 1,000 employers, including Boeing Co. and Wal-Mart Stores Inc., Painter said.

Kotlarek said he has heard complaints from TrueCar-participating dealers who say they can't make money because of TrueCar's discounts. Some dealers are also concerned that TrueCar requires direct access to their dealer management systems to verify sales.

Kotlarek said neither is an issue at Taylor Chevrolet.

He said: "If you're a salesman instead of an order taker, it's easy incremental volume."

You can reach David Barkholz at dbarkholz@crain.com.


Original source and read more at: www.AutoNews.com

Views: 334

Tags: Add, Car, Dealers, More, Seeks, TrueCar, to

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Comment by James A. Ziegler on December 21, 2011 at 4:40pm

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 12:31pm

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. :)

 

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