Oh No! Car Dealers Might Have To Deal With Informed Customers! That Must Be Illegal!

from the felony-interference-of-a-business-model dept

A few folks sent over this recent NY Times article about how the traditional auto sales world was apparently up in arms about a company called TrueCar that seeks to make the process of buying cars easier by providing more info to buyers about what cars are actually selling for, what the dealers' true prices are, and also offering guaranteed "haggle free" prices from certain dealers. To be honest, this really doesn't sound all that different from a few other services online. The last two times I've bought cars, I've been able to get good deals using online services like this and just emailing directly to dealers (and for anyone buying a car, I can't recommend CarBuyingTips.com enough, even with its 90's era web design -- that site has saved me a ton).

However, what's really incredible is how the industry has reacted to this site -- basically freaking out and whining about how consumers actually being informed might put them all out of business. The excuses are typical of what you'll find with an industry that works on a collusion or gatekeeper system when it's finally faced with real competition. They start talking about how real competition is evil and how it will lead to a worse situation with more scams. In fact, TrueCar got hit with claims that what it was doing, in providing consumers with more info, was illegal. They've even had to change their practices in some states -- which really only goes to show just how much car dealers have influenced various state laws in their favor to protect against true competition and an informed consumer.
Others, including Honda, have argued that TrueCar could open the door to unscrupulous dealers trying to sell a more expensive car or more options once they get the customers in the door — which Honda said reflected poorly on the brand. Honda also threatened to cut off marketing dollars to dealers who promoted its cars on the site below the invoice price, a price that is supposed to represent something close to the dealer’s cost (though dealers usually make more money on other manufacturer incentives and programs).
Think of just how convoluted and insane this argument is. Honda doesn't want informed consumers because (wait for it...) informed consumers might lead dealers to try to trick buyers. Seriously. Okay, time to cross Honda off any future potential car list.

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  1. icon
    Ima Fish (profile), 13 Feb 2012 @ 1:47pm

    Dealers are gatekeepers. Due to a patchwork of state and federal laws, it's actually illegal to sell a new car without a dealership license. In a way, they don't actually compete in a freemarket. So it's really not that surprising that they freakout when they're forced to compete.

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