If you have ever bought a car, you know how much of a hassle the process can be. First, you have to find the right car. Then you when you find the right car, you should find the best price for that car, and that can lead to arguing a price point with the dealer. Then, in all likelihood, you could end up walking away from the car because you couldn’t come to a deal, and then you’d have to start the process all over again.
Buyers of today are looking for a no-hassle car buying experience. They don’t want to spend multiple hours at multiple dealerships trying to come to a deal at a good price just to end up leaving frustrated and empty-handed. That’s where TrueCar comes in. Their mission, as per their website, is to “make the car buying process simple, fair and fun.”
TrueCar’s process took the car-buying world by storm when it first came around. It changed the way cars were bought—and sold. Dealerships were at war with each other, fighting for the lowest price, and car buyers would often walk away with huge savings, usually to the detriment of the dealership.
TrueCar’s process was revolutionary. For each make and model that was searched for, they showed the following things:
- Dealer cost
- The average price people in the area paid for that particular car
- The factory invoice, or the price that the manufacturer charges the dealer for the car
- The Manufacturer’s Suggested Retail Price (MSRP)
Customers who used TrueCar.com expected a good price to be between the dealer cost and the factory invoice. If you were a consumer who had this information, it was ideal for you but bad for car dealerships and car manufacturers. As a result, dealerships asked TrueCar to change their model and discuss savings compared to MSRP instead of compared to factory invoice.
Now, TrueCar transforms the car buying experience by showing what other car buyers in the area have paid for a particular make and model as well as the estimated prices for that make and model, something they refer to as upfront pricing information, which they receive from their network of TrueCar Certified Car Dealers.
The upfront pricing information shows savings off the MSRP that the customer can take to the dealer through a Guaranteed Savings Certificate to apply towards the purchase of the car.
TrueCar’s process still works, but under their new model, how much money are you saving and how good is TrueCar to their promise that you’ll never overpay?
I decided to do a little research to see just how much money using TrueCar saves. I went to their website and chose a random vehicle in my area: A Jeep Cherokee. The results of my search are below.
Before TrueCar changed their model, the market average was estimated to be in between factory invoice and dealer cost, but you’ll notice, as per their new model, they no longer include dealer cost in the given information, and the market average is now estimated to be above the factory invoice. This gives car buyers the impression that buying a car at the factory invoice price is a better deal than most.
According to TrueCar, you can get a Jeep Cherokee in my area for $4,519 off MSRP, which seems like a good deal, especially considering that the MSRP is $28,740. But once you start considering what other car dealerships who are not certified with TrueCar.com are offering for the same car, you may change your mind about what a good deal is.
TrueCar said that there were three certified dealers in my area, but when I checked them out, only two of the three listed had Jeep Cherokees available: Lucas-Smith Chrysler Centere and South County Dodge Chrysler Jeep.
Of those two, only South County Dodge Chrysler Jeep honored the TrueCar price. South County had two Jeep Cherokees available, both for under the TrueCar average market price of $24,825. The Jeeps that South County had available even went under the TrueCar average of $24,221, one coming in at $23,536 and the other coming in at $23,185.
The prices listed for the two Jeeps sold by Lucas-Smith Chrysler Centere, however, were $26,225 and $30,592. While one of them was above the average market value, it was below the factory invoice price given by TrueCar.com. The other one, though, was priced almost 2,000 dollars over the MSRP. And those prices were before adding in tax.
Given that only two of the three certified dealers had anything to offer me, and only half of those were at or under the TrueCar price point, I decided to look elsewhere to see if what TrueCar offered really was the best deal. There are hundreds of car dealerships where I live, which means there are many car dealerships that offer Jeep Cherokees and are within a reasonable driving distance.
Dave Sinclair Chrysler Dodge Jeep Ram is one of the dealerships I stumbled upon in my online search for nearby dealerships. When I searched their website for prices on Jeep Cherokees, the first result I found offered a final price of $22,900. That’s over $1,000 below the TrueCar average. But that was just the first result. The cheapest Cherokee I found was listed at $21,320, almost $3,000 less than the TrueCar average.
Dave Sinclair was not the only car dealership I found that had significantly lower prices that the TrueCar average price. Lou Fusz Chrysler Jeep Dodge had Jeeps starting as low as $21,423, just over $100 more than the lowest-priced Jeep Cherokees at Dave Sinclair. And it keeps going. There are multiple car dealerships that don’t appear on TrueCar that are willing to sell to you at an exponentially lower price.
Using upfront pricing information, you and other buyers will be able to recognize fair prices based off what other buyers paid. As a result, both consumers and dealers have a guide to help them establish trust and come to a fair agreement on a price.
The problem is that most of the dealers that are TrueCar Certified Dealerships would be all too happy to sell you a car at the price that is on your guaranteed savings certificate from TrueCar because when they sell it to you at that price, they can still make a healthy profit.
TrueCar also doesn’t account for all the extra money that dealers will try to get you to spend on things such as loan/APR manipulation, warranties, and service plans. The car dealers will sell you the car for the TrueCar discounted price, but then they will try to convince you that you need all these extras (and more) to make up the money they are losing in giving you the discount.
When I made my TrueCar.com profile to do research, I was asked to provide my email address and my phone number. While it hasn’t happened to me, at least not yet, I have read reviews about TrueCar in which the reviewers said that when they created their account, they were bombarded with emails and phone calls from TrueCar Certified Dealerships about cars they weren’t even interested in.
Therefore, car dealerships love TrueCar. Every time someone creates a profile with TrueCar and signs the user agreement, TrueCar has the right to share their contact information with their certified car dealers. TrueCar provides their dealers with leads through which the dealers are then able to obtain complete contact information for potential car buyers.
This complete contact information is good for business because consumers who search through TrueCar are led to believe that their experience at the car dealership will be hassle-free. As a result, they will not know what kind of hoops they will have to jump through when they get to the dealership.
When it comes to TrueCar’s guaranteed savings, there is a catch (there is always a catch). In some states, you could receive estimated savings instead of guaranteed savings, and those are two very different things, especially when you are making a purchase that is multiple thousands of dollars.
TrueCar does have some redeeming qualities, though. It is partnering up with some of America’s biggest and most highly regarded service organizations to help educate their members both about the car market and about any other savings or incentives that might be available in their area. Such services include:
- American Express
- Consumer Reports
TrueCar is around to do two things: transform the car-buying experience for consumers and change the way that car dealers appeal to consumers and sell cars. It does both things to an extent, but how effectively it does them is in question. You can still get savings using TrueCar.com, but those savings should simply be a starting point in your car buying experience.
Image Credits: TrueCar.com