Recent news articles show that truecar.com (a car buying website) has managed to sign up about 7,000 new car dealerships which pay around $300 for each car they sell on Truecar.com’s website at “presumably bottom line prices”. These news articles show that approximately 2.8% of the 16,000,000 cars sold in the U.S. per year are sold through truecar.com. In other words truecar.com is generating revenues of approximately $134,400,000 per year at the expense of the dealerships who are forced to sell cheap. The other 13,000 or so new car dealerships sell the other 97.2 % or 15,552,000 of new cars through conventional advertising and marketing methods.
Obviously the dealerships which sell through conventional methods have higher profits than those who sell at “presumably bottom line prices” on truecar.com. The word “presumably” is used because the prices advertised on truecar.com may not actually be bottom line prices but instead they may be determined by unknown methods often leading prospective car buyers to believe that they are the best prices possible. Truecar.com used to show buyers invoices from other dealer transactions as a guide line for other dealerships to adhere to but recently they have made some changes to their policy eliminating that practice and increasing the so called “bottom line prices” and also increasing the fee that they charge to dealerships for each car sold. As a result of this new business practice the Federal Trade Commission is investigating whether the resulting higher prices from the company’s changes were potentially the result of fair market pressure or illegal collusion.
Great things are happening – in early 2015 the Price Setter platform will be rolled out to help both new car Buyers and Sellers interact directly with each other and be able to implement a pricing and negotiation method as intended by the true supply and demand business method and get the best deals possible; even better than on truecar.com. How is that possible? As mentioned above those dealerships who normally sell using conventional marketing and advertising methods and who do not advertise low prices across the board have higher profits. Therefore they can afford to, every once in a while, sell a few vehicles at prices bellow truecar.com’s “presumed bottom line” prices eventually forcing truecar.com to reconsider their business practices. The dealerships which now use truecar.com are the more likely to switch to Price Setter in the near feature and make more money selling their cars following true supply and demand practices and not a price established by a third party. Dealerships which normally use conventional marketing and advertising methods will soon also switch to Price Setter to be able to sell more cars.
Dealerships who become members of Price Setter will be able to deposit and store pricing parameters in a database cloud so their prices can adjust in real time up or down exclusively and specifically for each sale transaction not permanently. Those pricing parameters come in to play on demand and in real time only if and when being compared to the prices of a competitor in the same area. Adjusting prices do not always have to go all the way to the bottom but only a small percentage (set by each dealership) lower than the nearest competitor. If there are no competitors in the area selected by the buyer then that dealer gets to sell the vehicle at a higher price. Price arbitrations are done in a closed environment using patented technology. Pricing parameters are only known by each individual dealership and never disclosed to the public or competing dealerships.
Car buyers on the other hand will prefer to conduct their shopping using true supply and demand methods with Price Setter instead of being mislead by a third party. If they are not satisfied by a price obtained by engaging dealerships in a particular immediate area that buyer could increase the search area to involve more dealers until they find the price they want. Alternatively, as mentioned above, they can use the price obtained from a non member dealership (Truecar.com price certificate) share that price with Price Setter and beat that price on the spot. (See the Beat that Price section on the navigation menu above)