The Truecar Controversy (and our opinion of it)

Jim Henry's article on his Forbes Automotive blog yesterday caught my attention because I've been doing nothing but trying to understand the deeper relationship between their integration with dealer DMS data, and the concern so many folks have expressed on popular automotive networking sites.  I've finally come around to the notion that their technology may have a good application somewhere but it isn't going to change the profit and loss structure of the new car departments in dealers that have integrations feeding Truecar.  My comment was called out by the writer and I am repeating it below for easy access.  Let me know your thoughts and we can correspond directly or via the MotiveLogic blog.

Profit left new car sales years ago. The semantics of MSRP, Invoice and Sticker Price are irrelevant to the discussion, since the average new car is sold below dealer COST. According to the National Association of Automobile Dealers recently released NADAData2011 study “New-vehicle department operating profit at the average dealership continued to decline and was below breakeven in 2010″.

While the controversy about the impact of Truecar’s technology is interesting, more interesting is how dealers can generate additional revenue from their service departments. Simply put, service profits keep dealership doors open. But their core systems (called DMS) inhibit business improvement in service.

Changing the game to improve and sustain additional profits for dealers will happen in their service departments as they adopt state-of-the-art technologies to gamify and reward the service employee’s role in customer value creation and satisfaction.

Gregg Gerdau
CEO
MotiveLogic Corporation