AutoNation to Give TrueCar Services Another Chance
April 29 2016 - 3:20PM
Dow Jones News
The chief executive of AutoNation Inc., the nation's largest
light-vehicle retailer, is looking to mend fences with online
car-buying firm TrueCar Inc. after a messy dispute over access to
consumer data caused a high-profile rift last year.
TrueCar, a California firm that clashed with dealers over
marketing practices, is now seeking to repair relations amid a wave
of legal and financial troubles. TrueCar is enacting a series of
reforms, aiming to respond to concerns raised by AutoNation and
other dealers.
In an interview Friday, AutoNation Chief Executive Mike Jackson
said the dealership chain will pilot TrueCar's new approach in 55
of its stores. "The door is now open for a partnership," Mr.
Jackson said.
Regaining AutoNation as a customer is an important step. Losing
the Fort Lauderdale. Fla., dealership chain—which sells more than
300,000 new vehicles annually—was a major blow for the
publically-traded TrueCar, precipitating a plunge in revenue and
stock price.
Shares of TrueCar recently traded at $7.02, well below its
all-time high of $24.15 in September 2014, and below its $9 initial
public offering price.
Shortly after the break with AutoNation, TrueCar founder and
chief executive Scott Painter stepped down. Mr. Painter, who
established the company in 2005 and took it public in 2014, had
long been a vocal critic of the way traditional auto dealers sell
cars. He marketed TrueCar as a more transparent option.
"It was a shock to our system when AutoNation left," said Chip
Perry, Mr. Painter's replacement as of last fall. "It sent a strong
message that resulted in me being hired."
TrueCar has since dropped its previous demands on AutoNation,
which owns and operates 370 new-car franchises nationwide.
The Santa Monica, Calif.-based car-shopping service also has
made other changes requested by dealers, including agreeing to
share customer email addresses and dropping marketing phrases, such
as "Never Overpay," that portray dealers in a negative light.
The move comes amid growing tensions between the nation's auto
dealers and car-shopping websites like TrueCar, Edmunds.com and
Kelley Blue Book's kbb.com that often charge dealers a fee to steer
would-be shoppers to their showrooms.
TrueCar, which has more than 11,000 dealers in its network, uses
its website to attract customers by offering them an easy way to
compare prices and lock-in savings before stepping into a showroom.
TrueCar charges some dealers up to $400 a referral if it leads to a
purchase.
Dealers have long bristled at TrueCar's business and marketing
practices, though, arguing the service drives a financial wedge
between auto retailers and their customers.
Last year, a group of dealers in New York sued TrueCar, alleging
the service promotes false advertising and unfair business
practices. Jeff Swart, TrueCar's general counsel, said the claims
are without merit.
As dealers invest in their own web shopping tools, they are also
rethinking their reliance on third-party websites.
AutoNation has invested more than $100 million to overhaul its
digital storefront, aiming to make it easier to use and allow
buyers to complete nearly all of the purchase transaction
online.
Those efforts have helped AutoNation drive more business to its
stores through its own website, reducing its reliance on referral
traffic. Today, less than 10% of its customers come through
third-party websites.
Mr. Jackson expects this shift to continue as the site expands
but added that third-party referrals will still play a role going
forward.
Write to Christina Rogers at christina.rogers@wsj.com
Corrections & Amplifications: Jeff Swart, TrueCar's general
counsel, said the claims are without merit. An earlier version of
this article incorrectly stated spelled his last name. (April
29)
(END) Dow Jones Newswires
April 29, 2016 15:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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