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Bankruptcy Good for Auto Industry - TrueCar's Scott Painter

Scott Painter expressing his opinion during an interview that bankruptcy for both car companies and dealerships is good for the Auto Industry and what needs to happen - Scott Painter is CEO of both TrueCar and ZAG

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Comment by Keith Shetterly on December 27, 2011 at 8:52pm

ANYway, back to regular programming on this video:  Is Scott Painter really right?  Are others who say we deserve it because we're not "transparent" really right?  Opinion?  Fact?


Comment by Keith Shetterly on December 27, 2011 at 8:47pm

Oh.  I forgot.  Holdback is not profit.  Anyone thinking that doesn't understand what it is.  Common, but still wrong.

Comment by Keith Shetterly on December 27, 2011 at 8:23pm

@ Tim:  Thanks.  We. Get. You. Loud. And. Clear.  Thankfully.

Me?  Transparency:  US Navy Vet.  Mandrin linguist.  Bachelor's of Science in Electrical Engineering.  Hardware.  Software.  IBM, Compaq, Microsoft.  #1 sales worldwide Microsoft 1999, #2 2000.  Retired to the dot bomb VC effort and then the entertainment industry.  Entered car biz on a cash flow issue and outsold everybody.  Became BDC process specialist.  Internet sales specialist.  eBay sales.  Website development.  eCommerce Director.  Worked with dealers for Saturn, GMC, Buick, Pontiac, Hummer, Cadillac, Volvo, VW, Suzuki, Kia, Chrysler, Hyundai, Toyota lines.  Plus consulted with Ford stores.  Writer, published in Wards Auto and a few other places.  Online editor.  53 years old.  Father of two, father to five.

And that's about half of it.  I'm proud to be in this business, and I have no qualms at all negotiating and selling fairly.  Sounds like you should recommendTrueCar to your owner.

I wish you all the luck you can get with that, considering TrueCar isn't transparent about their pricing methodology, their exact application of dealer's DMS data, their sales data partnering, or the $300 fee the dealers pay to them.  Just to start.  If that's transparency hypocrisy to you in the DEALER's direction, I just don't have much else to say.

Happy selling,


Comment by Tim Rulapaugh on December 27, 2011 at 7:57pm

@Keith - My amusement is the hypocrisy...the double standard...of trying to hold TrueCar and Scott Painter to one level of transparency while at the same time not even going near the idea of holding car dealers to the same level.

I used holdbacks as ONE example of expenses / profits that dealers don't tell their customers about.  I'm aware there are many that can be added into it, but my point is most people expect and accept expenses like lighting bills, labor, etc., because those are common to all retail.  How many people know that even when the dealer is claiming they're selling at cost, they're actually going to end up making a few hundred, if not thousands, of dollars of profit on the sale?

Ashely has me?  On what...finding what a store paid for something?  It's not difficult.  You should try it sometime.

Personally, I don't care if pricing is transparent or not.  I'm willing to pay a little above store cost so that the store and it's employees can make a few dollars.  That's how businesses stay in business.  If I suspect you're trying to charge me too much, I'll ask the appropriate questions.  If you don't shoot straight with me, you'll lose my business.

@Scott - Thanks for checking out!  Unfortunately, I don't have any control over what's posted on there or the content of the ads.  In fact, I wasn't even aware that those ads were on that site!  Last I was told, that site is going to become kind of an informational site about the dealership (I'm the IT / social media guy).

If you think I'm taking a stand about transparency, you're misunderstanding what I'm saying.  I'm taking a stand against people who demand it from one place, yet refuse to grant it in another. 

My view on transparency is simple...due to the influence of social media and the internet among other things, transparency is becoming more and more a fact of life and in demand.  As long as people understand and are respectful of the fact that businesses have to make a profit to stay in business, I don't care how much a customer knows.  If a customer starts demanding a product at cost, regardless of profit, then the transparency needs to be cut back.

Since you brought it up and in the spirit of transparency...

I am a veteran of the US Air Force where I received Master's level training in electronics / avionics.  After getting out, I eventually made my way into retail.  In a little over a year, I went from being a part-time overnight shelf stocker to being an award-winning big box retail salesman for a national chain to being hired to run my own store for a large regional chain.  The manager thing fell apart (DM wasn't providing the hours, pay, or benefits he promised), I was hired by a company that helped train sales associates in a different big box retail chain.  I was also a top-ranked account manager for one of the largest soft drink distributors in the world.  After a detour to be a crew leader for the 2010 Census, I decided to follow my interest in computers and security and ended up in car world doing IT stuff and social media.

Comment by Scott Falcone on December 27, 2011 at 6:28pm

@ Tim you state

"My point is by comparison shopping, you can get a pretty good idea of what an item cost to the store.

How can you do that with buying a vehicle?  Dealers play so many numbers games it's hard for a customer to walk out the door knowing exactly what they really paid for their new vehicle.  About all they know is what their monthly payment is going to be.  And that's not even taking into account the different "at dealer cost" prices they will get on the exact same vehicle at other dealers!  Where is the transparency in that?" 

I watched and saw that your commercial stated "your CPA said you should get rid of inventory" and "many of you (consumer) need a tax break" (how does a consumer in Iowa achieve this tax break by buying a new vehicle from you?). Did your CPA REALLY say that to the owner and he then created a BLOWOUT sale? Transparency??? That's your idea? 

In the About Us section there is a video that states in your service department you use "cost plus" pricing. You calculate the cost and then add a "Little" profit. How much is a little? Transparency...

The answer by the way to how much do you add to "make it a little" should be "none of my damn business..." It's not, and most dealers feel the same way. I don't want to know how much money you make. I hope it's a lot.

I'm not mad you run ads that say whatever it is you want to say, but I don't think you should be spouting statements like the one above and then calling others out in the industry for failing to be transparent or casting a wide net on the industry and all of the heinous dealers "playing games". As you can tell, I take offense and usually speak up for dealers when someone attacks them in this fashion. I actually looked at your profile to see if you worked in retail. I honestly would not have been able to tell by your comments. I don't see how trying to explain what holdback is to a customer makes for a less confusing situation in the buying process. Most of the industry employees don't know what it represents so how does talking about it with a customer make sense? They just want to feel like they got a good deal and treated right. That can be done without rolling out the Invoice book and sharing the cost of electricity and garage keepers insurance, etc. don't you think. I do applaud your efforts to provide a buying environment that makes customers feel good about their shopping experience, just think you should slow down, before hitting the soapbox again, or as you stated earlier, "It will be very interesting to see who just talks the talk about adapting to the new ways of doing business and who steps up and walks the walk...". There are plenty of methods of doing business in this "New Way" you mention, but I assure you that sharing holdback with consumers does not lend itself to being one of them and bashing dealers that you don't know doesn't aid in the improvement of our industry either.


Comment by Ralph Paglia on December 27, 2011 at 5:56pm

FACT: "Holdback" was initially implemented by General Motors as a form of a security deposit to ensure that GM was paid for outstanding Parts invoices that may remain unpaid if a dealership was sold or closed.

Comment by Keith Shetterly on December 27, 2011 at 5:25pm

@ John Clark:  Good points.  Yes, the DMS access by a lot of companies is not something dealerships in general really paid attention to, believe it or not.  Agreements can allow re-purposing of that data, especially if it is "anonymized".  The legal staff for dealers is really front-facing (consumer issues), OEM-facing (manufacturer), and business-facing (contracts and collections).  It really isn't tuned into most of the vendor agreements, and most GMs really don't know how to read these types of contracts.  So, of the ten GMs/exGMs I know, only a handful would even be educated enough to realize what they were looking at--and most would not have expected to see such language or envision the ramifications.  We've had folks ON THESE BOARDS who ran back and looked, and disengaged a vendor because of this issue.  Thanks!

Comment by Keith Shetterly on December 27, 2011 at 5:16pm

@ Tim:  There isn't a single point you've raised that is new.  So, if you're amused, you're missing it.  Some people don't get it.  I'm okay with that.  The rest of us do, and that rest is growing.

Instead of removing the negotiation by racing to the lowest price, I'd be willing to go with the Walmart model of pricing is the pricing, and my profit is my business.  TrueCar would never support that . . . because their parasitic relationship to dealers DEPENDS on negotiation.

Abd I don't care who knows about holdback.  Ashley has you, and you know it (good job, Ashley!).  And the "rest" of us know it.  And the amusement for TrueCar has just started.

It sure is amazing to see someone in the business talking about holdback like you wrote.  You do understand what holdback really is, right?


Comment by Tim Rulapaugh on December 27, 2011 at 5:05pm

@Keith - I didn't miss any point.  I was making a totally new point.

I've been reading these feature posts about TrueCar for the past couple weeks with a certain amount of interest as our owner has asked me questions about TrueCar a couple times and I need to get up to speed on what's going on.  I've even posted a few times.  The main theme I keep seeing over and over can be boiled down to TrueCar = BAD for dealers in particular due to Scott Painter's talk about making dealerships obsolete.  A very distant secondary theme has been transparency.

But since you brought up the topic of transparency...I have to admit to a certain level of amusement watching you and others rant about Painter's level of transparency with a customer about the fees TrueCar is charging dealers.  Correct me if I'm wrong, but dealers aren't exactly the most upfront with customers about the true cost to a dealer and profit a dealer makes on a new vehicle.  I'd be willing to bet most customers aren't aware of the holdbacks.  Do you think customers are aware of the fees dealers have to pay for a vehicle to sit on their lot?

Why should Painter and TrueCar be held to a different level of transparency than a dealer?

@Ashley - The cost in question isn't the cost to the manufacturer to build a product.  The cost in question is what the store paid for that product compared to what they're charging you, the customer.  If you know where to look or who to talk to, you can find that info pretty easily.

The transparency I was referring to was by using price comparisons.  For example, if your TV at Best Buy cost $800, but you can get the exact same TV at Wal-Mart (not likely! LOL) for $600, isn't it reasonable to guesstimate that Best Buy has at least a $200 markup?  But if you see that same TV on sale at Best Buy for $500, doesn't that start to narrow the range of what they probably paid?

My point is by comparison shopping, you can get a pretty good idea of what an item cost to the store.

How can you do that with buying a vehicle?  Dealers play so many numbers games it's hard for a customer to walk out the door knowing exactly what they really paid for their new vehicle.  About all they know is what their monthly payment is going to be.  And that's not even taking into account the different "at dealer cost" prices they will get on the exact same vehicle at other dealers!  Where is the transparency in that?

Comment by Ashley Corning on December 27, 2011 at 3:26pm

I was under the impression, and this is just lil ol internet manager me (I do not speak for my dealer principals at this point) that the reason they needed the DMS access is so they can track the sold customers and charge us for them. There was no mention of publicly displaying it, if they were "transparent" and told us they were going to use it to show the consumer unreasonable expectations for prices, there is no way I would have agreed... and I hope the DMS connection is closed, better make sure from the IT guy now that you mention it!

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