{"id":56326,"date":"2012-12-18T11:20:21","date_gmt":"2012-12-18T16:20:21","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=56326"},"modified":"2012-12-18T10:59:14","modified_gmt":"2012-12-18T15:59:14","slug":"truecar-reinvents-itself","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2012\/12\/truecar-reinvents-itself\/","title":{"rendered":"TrueCar Reinvents Itself"},"content":{"rendered":"
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TrueCar's Scott Painter has lost a lot of money -- and weight -- while trying to fix the company's problems.<\/figcaption><\/figure>\n

For a businessman, there are few things worse than having to start all over again \u2013 unless it involves losing millions of dollars in the process.<\/p>\n

But few in the auto industry have had more experience reinventing themselves than Scott Painter, a serial entrepreneur who has repeatedly come up with concepts aimed at rethinking the way cars are sold. Among the companies to his credit are CarsDirect and TrueCar.<\/p>\n

The latter website made waves when it began offering U.S. car buyers the sort of deep, insider pricing information that hadn\u2019t previously been made public, including not only data on what dealers really paid for a vehicle but also the lowest prices that customers were getting away with paying.<\/p>\n

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Stay on Top!<\/figcaption><\/figure>\n

Not surprisingly, that didn\u2019t sit well with retailers who accused TrueCar of violating various strict franchising laws.\u00a0 Notably, states like Texas and Virginia bar so-called \u201cbird-dogging,\u201d or auto brokering, where a third party steps in to help a customer get a better price.<\/p>\n

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A pricing page from the revised TrueCar.com. Click to enlarge for a closer look.<\/figcaption><\/figure>\n

Early this year, Painter and company waved a white flag and promised to work with, rather than against, dealers, hoping to develop a new approach that would keep them happy \u2013 but without angering consumers by shattering a model that promised to help them get the best possible deal.<\/p>\n

Painter, 44 \u2013 and about 44 pounds lighter after a year in crisis mode \u2013 recently came to Detroit to discuss the reinvention of TrueCar.\u00a0 \u201cWe\u2019re like a well-funded start-up,\u201d he laughed, \u201conly we\u2019re entering our eighth year.\u00a0 We lost a lot of money. I lost a lot of weight.\u00a0 We looked into the abyss and decided we wanted to work with the industry rather than fight it.\u201d<\/p>\n

TrueCar wasn\u2019t the first web service attempting to provide shoppers with useful pricing information.\u00a0 There are plenty of websites that offer \u201cinvoice pricing\u201d statistics.\u00a0 But anyone familiar with the industry knows that there are all sorts of hidden discounts, such as so-called \u201choldbacks\u201d that lower the actual dealer cost.\u00a0 TrueCar\u2019s focus on transparency revealed the real numbers.<\/p>\n

But that original model, Painter acknowledged, all but made it impossible for dealers to earn any money at all.\u00a0 It effectively created an environment that kept driving down prices to the point where retailers would have to drop below cost to keep new car customers and hope to make it up on other parts of the business, such as the repair shop or by mark-ups on financing and insurance.<\/p>\n

\u201cWe became known for being the \u2018Crazy Eddie\u2019 of cars,\u201d said Painter, a reference to a one-time New York City electronics retailer famous for drastically undercutting the competition.<\/p>\n

Over the last 12 months, TrueCar has moved away from that model. Complicating the process, it has had to develop sites that comply with various franchise laws in all 50 states.\u00a0 The changes to the TrueCar site no longer reveal the rock-bottom number, though Painter and his associates insist buyers still get a real-world snapshot of a fair price \u2013 and can compare any offer with what other buyers nearby have been paying.<\/p>\n

\u201cWe\u2019re not (showing) the lowest price on the market\u201d anymore, he explained, though he insists the revisions translate into a fairer and \u201cbetter experience.\u201d And the service is now more focused on helping customers learn what else a dealer provides.<\/p>\n

Larry Dominique, a former Nissan executive now running TrueCar\u2019s Automotive Leasing Guide subsidiary, contended there is more to focus on than just price.\u00a0 Smart shoppers want to make sure they\u2019ll be taken care of by a dealer, which includes good service when needed and added benefits like a loaner car when a vehicle has to go into the shop.<\/p>\n

\u201cIn the part, we were about money and proximity,\u201d Dominique explained.\u00a0 \u201cWe weren\u2019t focused on the qualitative aspect of finding a great dealer.\u201d<\/p>\n

Whether the new model will play well with shoppers remains to be seen.\u00a0 But the revised approach is clearly making dealers happy.\u00a0 Prior to the legal flap, TrueCar represented 5,600 retailers.\u00a0 That fell to 3,170 before the new approach was announced.\u00a0 Now, Painter hints that the dealer count is \u201calmost back\u201d to its earlier peak and still growing — the site itself claiming 5,097 current dealers — with 40 of the 50 largest U.S. dealer groups now signed on.<\/p>\n

One reason is that TrueCar hasn\u2019t changed its original payment model.\u00a0 Most auto pricing services are built around a referral, or lead, model.\u00a0 Their goal is to get website visitors to click on a dealer link.\u00a0 Each time that happens they get paid.\u00a0 TrueCar only makes money, however, when someone actually purchases a vehicle.<\/p>\n

Painter claims that 30% of the shoppers who go beyond the basic process of just checking pricing and who actually connect to a dealer through TrueCar wind up making a purchase.\u00a0 While it\u2019s difficult to get precise industry data, that would seem to back his claim that TrueCar generates more sales \u2013 and more revenue \u2013 than the industry\u2019s lead-generating giant, Kelly Blue Book, despite having just a fraction of KBB\u2019s traffic.<\/p>\n

TrueCar is seeing 400,000 visitors monthly, a figure that jumps to 600,000 when one includes affiliate sites.\u00a0 Painter won\u2019t reveal precise financial figures but by comparison, KBB documents indicated it is generating $125 million in annual revenues on 8 million unique visitors a month.\u00a0 Painter did confirm that TrueCar posted \u201csubstantial\u201d losses for most of 2012 as it rejigged its business model \u2013 but insisted it is now moving back into the black.<\/p>\n

Would that lead him to take this, the 14th<\/sup> company he has started, public? \u201cI don\u2019t care,\u201d Painter asserted. \u201cWe\u2019re probably a year away from even thinking about it.\u201d<\/p>\n

No surprise there, of course. TrueCar will have to prove that the new model really will work for the industry and consumers alike \u2013 no easy feat \u2013 and generate significant revenue before investors would be willing to make their own guess as to what its own stock might be worth.<\/p>\n","protected":false},"excerpt":{"rendered":"

TrueCar made waves when it began offering car buyers the sort of insider pricing information they could use to get the best possible deals. But that approach ran afoul of dealer groups who threatened to drag TrueCar through the courts. The website has reinvented itself — but is it possible to keep both dealers AND car buyers happy at the same time? TheDetroitBureau.com has the story.<\/p>\n","protected":false},"author":2,"featured_media":46397,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[8],"tags":[],"make":[],"post-state":[],"category_old":[151],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/56326"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=56326"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/56326\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/46397"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=56326"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=56326"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=56326"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=56326"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=56326"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=56326"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}