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TrueCar gets tough with collecting advertising fees for sales

TrueCar is irking some dealers again, this time by demanding payment for all vehicles sold to customers who downloaded TrueCar-sponsored price offers.
The online shopping site had excused some payments if dealers said they had found the shoppers before the shoppers downloaded TrueCar offers. But starting Sunday, Sept. 1, TrueCar planned to implement the stricter payment policy nationally.
Shoppers get price offers from participating dealerships when they log onto TrueCar.com and ask for a quote.
Blasius Chevrolet-Cadillac in Waterbury, Conn., dropped TrueCar last month over the planned new policy, said Juan Rodriguez, the store’s Internet director.
And Acton Toyota of Littleton in Littleton, Mass., is among other dealers considering whether to keep TrueCar, said Justin Brun, the dealership’s e-commerce director. “We’re going to wait and see where the dust settles,” Brun said.
Last month, after consulting with the TrueCar National Dealer Council, the company completed the new policy that requires participating dealers to pay TrueCar a fee every time a customer who downloads a TrueCar price buys a vehicle.
TrueCar is one of many Internet sites that provide sales leads to dealerships. Last year, the company ran afoul of many dealers who said TrueCar’s sales policies drove down transaction prices. Also, some state regulators said TrueCar violated various state advertising and consumer laws.
Previously, TrueCar waived some payments from dealers if those retailers contested a TrueCar bill on the grounds that the car buyer came to the store before logging onto TrueCar’s site. The company also credited some dealers when they argued that vehicle sales to long-standing customers were barely influenced, if at all, by the TrueCar price guarantee, TrueCar-participating dealers said.
In all but a handful of states, TrueCar charges participating dealers $299 for every new vehicle and $399 for every used vehicle sold from a TrueCar price offer or dealership introduction. TrueCar verifies sales through access to information in the dealer’s main operating software, known as the dealer management system.
TrueCar CEO Scott Painter said in an interview that the company had to strengthen its payment policy. Last year TrueCar wrote off to goodwill about 5 percent of deals it wanted to collect from dealers after they contested the bills, Painter said.
TrueCar ended up forgoing $3.5 million to $4 million in revenue, he said. The company also spent substantial time and resources discussing billings with dealers, Painter said.
Earl Stewart, owner of Earl Stewart Toyota in North Palm Beach, Fla., and a member of the TrueCar dealer council, said the new policy is simpler and fairer than before.
Stewart said he has pitched low prices to TrueCar shoppers over the years and is happy to pay for the 30-plus incremental sales the site brings monthly. The store sells about 300 new and used vehicles per month.
Stewart said he felt TrueCar was lenient on contract enforcement over the past 18 months as it tried to rebuild a dealer network decimated in early 2012 by a regulatory crackdown on TrueCar operating and advertising practices.
“I’ve never asked for a refund,” Stewart said.
Other dealers are less understanding. Rodriguez of Blasius Chevrolet-Cadillac said he appreciated the 10 or so sales per month that TrueCar generated. But he typically contested one or two invoices per month.
He said he dropped TrueCar last month because he was unwilling to pay a fee for customers who test drove a car or visited the dealership before they went to the TrueCar site to check prices.
Consumers routinely use sites such as TrueCar to compare prices. The comparisons do not necessarily entitle TrueCar to claim a sale, Rodriguez said. “That would be like writing TrueCar a blank check,” he said.
For instance, TrueCar billed the dealership two months ago for vehicles bought by dealership employees, Rodriguez said. They had logged onto TrueCar during their shopping, he said.
Painter said TrueCar will listen to appeals, but it won’t be routinely swayed by “a small handful of dealers.”
He said TrueCar’s dealer census stands at 6,500 franchises after falling as low as 3,200 at the depth of the company’s regulatory troubles in 2012. TrueCar, which posted a net loss of $75 million in 2012, said it helped dealers sell 250,000 new and used vehicles last year or 2 percent of U.S. vehicles sold. Painter said the sales pace is even higher this year.
Brun of Acton Toyota said TrueCar risks losing him as a customer if it proceeds with tight enforcement of the new policy.
The dealership this year has paid TrueCar for 123 vehicles that the site helped to sell, while disputing about 50 invoices, Brun said. The TrueCar leads are a small but important piece of the 375 new and used vehicles that the store sells monthly, he said.
As TrueCar prepares to enforce the new policy, the dealership is trying to determine how many sales TrueCar influences.
Brun said, “We’re wrestling with whether we really need them.”


