The Truth About TrueCar: Why Car Dealers (& Buyers) Hate TrueCar

The Truth About TrueCar: Why Car Dealers (& Buyers) Hate TrueCar

It doesn’t come as too much of a surprise that when you Google search “car buying” one of the first results you see is for TrueCar. You may have heard of TrueCar from a friend, seen one of their many ads online or on TV, or even used the website yourself.

“Car buying” and “TrueCar” are nearly synonymous, but do you really know how TrueCar works “under the hood?” TrueCar’s convoluted behind the scenes relationship with car dealers might surprise you, and although the company was founded on a “customer first” mission and vision, they’ve seemingly pivoted away towards doing whatever they can to best support the people that pay their bills (aka the dealers).

A 2019 article from the New York Times is appropriately titled, “TrueCar’s No-Haggle Promise Meets a Chorus of Grumbles”. Let’s explore how TrueCar works, why dealers don’t like it, and why car buyers find it frustrating too.

Legal issues from the start

Soon after arriving on the car buying scene in 2005, TrueCar faced legal issues. TrueCar’s pricing model leveraged a sometimes predatory (and always illegal) business practice referred to as “bird-dogging”.

Bird-dogging is simple: it’s when one party sends leads (prospective car buyers) to dealers for a set price (usually a couple hundred dollars). Bird-dogging is illegal for a few reasons, mainly because it jeopardizes a consumer’s likelihood of getting a fair deal.

TrueCar’s business model quickly drew the ire of dealers as the leads they sent ended up not purchasing vehicles. Dealer’s paid for leads, and frequently they wouldn’t buy cars at the dealership, and instead they’d go back to TrueCar to “try and find another deal.” The dealership was essentially paying a bird-dogging fee for … nothing.

Eventually, after legal pressure from several states, TrueCar pivoted away from this pricing model, and instead decided to offer their “services” on a subscription basis. Dealers would be charged monthly for TrueCar’s leads instead of paying ad hoc. 

“I really thought that [TrueCar was] a competitor of ours and not a collaborator, that if we did our job properly we could source our own lead,” said Ray Shefska, a 43 year veteran of the car business. 

How TrueCar “works”

From a customer’s perspective, TrueCar seems like a blessing.

A quick search on the TrueCar website yields all sorts of information you want to arm yourself with during the car buying process. TrueCar shows you which dealers have the car you want, what other car buyers in your area are paying for that car, and the quality of the deal you can expect to get on a particular make and model. Sounds good, eh?

It is, until it isn’t.

The issue is that TrueCar warps potential car buyer’s expectations in a variety of different ways. What might be an excellent deal one day (on the end of the month, for example), could be impossible the next. How far beyond invoice dealers are willing to go can be altered by how close they are to a manufacturer’s incentive, the day of the month, or myriad other factors that are not made obvious by sites like TrueCar.

At the end of the day, TrueCar makes ends meet in the same way other online car research websites do: they sell your information to their network of car dealers. The unfortunate reality is that this introduces yet another middle-man in an already convoluted transaction process.

Remember, dealer’s have to pay monthly to get access to TrueCar leads, and even though dealers don’t like to do it, they still pony up the cash:

“One of the worst parts about having internet leads was that we typically work about four or five times harder effort wise … and you paid for the privilege of having made that deal!”

Car dealers need to recoup some of their “investment” in TrueCar when they sell you a car, and you don’t have to be a rocket scientist to figure out how they do that … it’s by charging you a bit more than they would have otherwise.

If you’re thinking about buying or selling your car, you might enjoy this article if you haven’t read it already: The Car Buyer’s Glossary of Terms, Lingo, and Jargon

Sitting in between car dealers and car buyers puts TrueCar in an impossible position. By trying to serve two very different audiences at the same time, neither of them end up with a truly satisfactory solution. This is one of the many challenges businesses in the automotive industry face.

truecar for car dealers

So are sites like TrueCar really smoothing the rocky cliff that is car buying? Are they just middlemen selling your information and shooting you into the same sales funnel that has been frustrating customers for a century? The true answer probably lies somewhere in the middle. Sites like TrueCar will exist until there is a fundamental change in the car buying process, and that fundamentally change probably won’t happen any time soon.

It’s unfortunate, but the reality is that dealers make money operating in the fashion that they do right now, and customers (although irritated), have become accustomed to the “status quo” that is car buying. Will it change? Absolutely. Will it take time? Without question. Will TrueCar be a part of the evolution? The jury is still out.

The Top 5 Worst Cars of All Time

The Top 5 Worst Cars of All Time

After forty years in the automotive industry, Ray Shefska has seen his fair share of great cars. Those same forty years have also given him a look at some of the worst. Let’s check out his top 5 worst cars of all time!

#5 Ford Pinto

“It didn’t have very many problems other than the fact that if it was rear ended, it would probably turn into a fireball,” says Ray. “I had to appraise one. I was always afraid to drive it on the street. I was always wanting to make sure that nobody was too close behind me.” Due to the tank being located at the rear, a simple fender bender could go from inconvenient to deadly in a matter of moments. “It was probably the only car that Ford ever sold that came standard with an asbestos driving suit,” Ray jokes. 

The Ford Pinto was in production from 1971–1980. It didn’t take long before The National Highway Traffic Safety Administration (NHTSA) became aware of the Pinto’s penchant to catch on fire. Ford ultimately recalled 1.5 million Pinto’s in 1978 and faced 117 different lawsuits from consumers as a result of the vehicle’s poor fuel system design.

#4 Chevrolet Corvair

“Ralph Nader wrote a book about it entitled Unsafe at Any Speed. I believe that even included while parked,” Ray remarks, “It was supposed to make driving better because the weight of the engine was over the drive wheels.” This very innovation was the Corvair’s downfall. The rear engine placement resulted in very poor handling, which in a performance vehicle means lots of accidents. The Corvair was also notorious for housing toxic fumes. “Chevrolet had not quite figured out how to keep all the fumes out of a cabin from having the engine in the rear,” Ray says.

In production from 1960–1969, Chevrolet produced and sold nearly 1.8 million Corvairs. And ironically, Motor Trend awarded the Corvair its “Car of the Year” award for 1960. Nonetheless, the Chevrolet Corvair comes in at number 4 on Ray’s list of the worst cars of all time.

If you’re thinking about buying a car, you might enjoy this article: Buy or Lease: How to Decide For Your Next Automobile

#3 Renault Le Car

“Renault never really made good cars, but that was a fine example of their worst car.” Ray says. The Le Car was known for being uncomfortably small, yet painfully slow. It also had a nonexistent parts network, which left countless drivers stranded with an unfixable car. “It was a true piece of crap. Often referred to as the Renault Le Toilet,” says Ray.

The Renault Le Car debuted in 1976 thanks to a partnership between Renault and American Motors Corporation and was in production from 1976 to 1983. For a brief period of time a Le Car Van was in production, but traction was hard to come by, with only 450 Le Car Vans built between 1979 and 1983.

#2 Chevrolet Vega

The Vega was known to have problems regarding its reliability, safety, and engine durability, but what made it infamous among car experts was its propensity to rust. “The Vega was known as perhaps the biggest rust bucket ever produced in the United States,” laughs Ray. “I’m pretty sure that they actually started rusting during production.” The Vega was also often reported to be prone to engine fires, due to leaking valve-stem seals. As Ray puts it, “The Vega was another fine example of why Chevrolet should not have been in the small car business during that time period.”

The Vega was in production for model years 1971–1977. It didn’t take long before the Vega encountered issues. By May of 1973 three recalls in three successive months plagued the Vega. Ironically, the Vega received awards from Motor Trend, Car and Driver, and the American Iron and Steel Institute in 1971, 1972, and 1973.

#1 The Worst Car of All Time, the Yugo

“The Yugo, as it turned out, was the world’s first disposable automobile,” says Ray. “It was like the Bic-Click of automobiles. Once the ink ran out you threw away the pen. Once that first full tank of gas ran out, you threw away the Yugo.” The Yugo will go down in history as one of the most poorly made cars of all time. One Pittsburgh dealer even offered a free Yugo to customers buying other cars at full price, but had thirteen out of fourteen buyers turn him down. “The absolute worst automobile ever sold in this country, it was just unbelievable,” sighs Ray. 

The Yugo ranks number one on Ray’s list of the worst cars of all time. Fortunately only 141,651 were ever sold in the United States.

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