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One-On-One With TrueCar’s Scott Painter

The editor offers a few excerpts from his conversation with TrueCar founder Scott Painter.

December 15, 2011

 

The magazine is diving into the shark-infested waters surrounding TrueCar and its quest to bring transparency to the car-buying experience. Yeah, I’ve been reading you bloggers out there. You’ve been working overtime to connect the dots and figure out what the company is really after. I can appreciate your passion.

So, I decided to drop in on TrueCar and its controversial founder, Scott Painter, at the company’s Santa Monica, Calif., offices. And let me tell you, he has quite an impressive setup. The office I visited, which houses the company’s IT and marketing departments, is located a block away from the famed Santa Monica Pier. It takes up the entire second floor of the building, has dry-erase boards for walls and computers everywhere. I watched as a wall-mounted monitor tracked successful TrueCar-originated deals in real time. At the time, the monitor showed that 27,742 successful deals had passed through the TrueCar channel in the last 30 days.

By the way, it took the company four years to deliver approximately 100,000 deals to its retail customers. Last year, the company accomplished that in nine months. This year, it did it in six.

I interviewed Painter for more than hour, and the contents of our discussion will appear in the coming days and weeks. For now, let me just say that the noise you guys and gals are making out there has been heard. Painter had been on the phone with Jim Ziegler earlier that day, and he said he was reaching out to several others who are leading the charge against his company.

Did he fail to anticipate the backlash? Well, I think he believed his service’s value proposition would do the talking for him. The truth is, there are segments of our industry who are quietly hoping TrueCar’s progress is slowed, one way or the other. I attended the National Automotive Finance Association’s annual conference in Dallas/Fort Worth this past June and sat in on a presentation about the industry’s biggest threats. TrueCar was listed alongside the Consumer Financial Protection Bureau.

So, I wanted to provide you with some of the things I talked to Painter about during my visit, starting with Honda’s policy regarding TrueCar. Word on the street is that Honda has directed all of its dealers not to use TrueCar. Chris Martin, a spokesperson for the automaker, denied it. He said that Honda dealers who wish to receive marketing dollars from the company are required to continue to adhere to its advertising guidelines, which restrict dealers from advertising new Hondas at below dealer invoice and new Acuras below MSRP (plus destination and handling charges).

“The function of these guidelines is three-fold,” Martin says. “First, it encourages dealers to use the advertising money provided by American Honda for interbrand advertising. That is, rather than providing funds to dealers so that they can engage in discount advertising against other Honda and Acura dealers, American Honda wants dealers to use the funds to promote the advantages of Honda and Acura vehicles when compared with competing brands.

“Second, discount advertising is detrimental to the Honda and Acura brand images. American Honda has no wish to pay for ads that portray its products as ‘cheap’ or ‘low-end’ vehicles.”

Martin added that Honda dealers who don’t take advantage of DMA/CMA funds are excluded from the restriction. He concluded by also noting that Honda is looking to protect its brand from bait-and-switch tactics or using its good name to sell expensive accessories, service contracts and other products.

Back at TrueCar, Painter said he is able to see and track when its dealers engage in those types of tactics. In fact, during our interview, he said the company had suspended or terminated 49 dealers in the last 30 days. He added that there are currently 96 other dealers that they’re monitoring.

OK, so let’s get into my interview.

F&I: What is your response to Honda’s policy?

Painter: The facts are that more than 30 percent of Hondas are sold below MSRP, and more than 90 percent of Acuras are sold below MSRP. Honda’s policy doesn’t change what dealers are selling cars for. It uniquely penalizes Honda dealers and Acura dealers who would like to use price as a way of attracting in-market customers. Thirty-two percent of Honda dealers use TrueCar.

F&I: So, you think they’re hurting their dealers?

Painter: Honda could be selling a lot more cars. We don’t want to fight with Honda. This isn’t an issue of TrueCar versus Honda. This is an issue of a policy that I think is not effective in the marketplace. It doesn’t change reality, it doesn’t help Honda’s brand. It’s not the way consumers are shopping today.

F&I: Have you reached out to Honda?

Painter: We’re eager to talk with Honda.

F&I: What do you say to your critics?

Painter: The American consumer and the auto industry have a low degree of trust. I think most consumers feel that [buying a car] is a fearful, intimidating and frustrating process. I think we genuinely believe that truth and transparency and upfront pricing are good for the industry, good for manufacturers, good for their brand and good for their relationship with customers. It will help their customers to be happier, more satisfied, more confident and they will buy a higher percentage of the time.

F&I: Are you surprised by what’s being said and written about your company?

Painter: I think a lot of what we’ve read online is very emotional. There’s a lot of intuition and not a lot of fact. I think our job is to answer the questions and give the facts. Quite honestly, we wouldn’t be here and we wouldn’t be profitable and growing if it wasn’t of mutual benefit to our dealers and to our consumers.

F&I: Have you spoken to any of your critics directly?

Painter: We have not only extended this invitation to Jim Ziegler, but we are extending it to all of your readers: Come to Santa Monica. We’re happy to share the facts. Today, I did have a conversation with Jim and there were a couple things that we said to him that, I think, he was surprised to hear. And we’re prepared to back it up factually.

 

Stay tuned for more on TrueCar.

Comments

  1. 1. Wendell Jones [ December 16, 2011 @ 07:12AM ]

    What experience does Scott Painter have in the retail auto business?

    F&I: Great question. And I will be covering that in my next blog on the topic.

  2. 2. Jim Larsen [ December 16, 2011 @ 02:28PM ]

    Why is it they want to show consumers what dealers gross profit is but do not display how much a dealer is charged for the lead?

  3. 3. Brett Livingston [ December 19, 2011 @ 05:50PM ]

    Come on folks. This doesn't require deep investigation. It is very simple, Because dealer profits HAVE significantly been reduced with TrueCar. it results in less money for dealers. Dealers hire people. This results in less jobs and/or significantly lower personal income for these individual people. This is an economic monster that eats itself. Duh-uh!

  4. 4. Tom [ December 20, 2011 @ 12:56PM ]

    TrueCar is the ENEMY ofr dealer profit!

  5. 5. Stan Esposito [ December 27, 2011 @ 05:08PM ]

    Painter is a guy so full of arrogance he thinks he knows better than the customer and the dealer while screwing them both. truecar inserts itself into the deal as a middleman. They charge the dealer $300 per deal. Who ends up paying the $300? If it sounds too good to be true it probably is.

  6. 6. Frank Martin [ December 30, 2011 @ 08:58AM ]

    Volume has a way of absorbing a few loser deals a month for the purpose of buying business from your competitor, or hitting unit bonuse. When it becomes a larger percentage of your business, it will have a negative effect on your bottom line. Fed by greed the monster will grow until it is too big to fail. Like pigs to slaughter we blindly proceed until one day we look back and wondered what happened. The car business as we know it, will no longer include us, but instead will be comprised of mundane delivery centers. Customers will already have their financing, service contracts, and checks pre arranged to bring with them when they take delivery. The Monster is feeding, and will soon be eating everything. Kill the Beast!!

  7. 7. Sandra [ August 04, 2013 @ 11:28PM ]

    We buy vehicles outright. Sell us yours.
    http://www.houston-auto-dealers.net

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