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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.
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.
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."
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