AutoNation Dumps TrueCar

Depending on the point of view of each company, either AutoNation Inc. (NYSE: AN) dumped TrueCar Inc. (NASDAQ: TRUE) or the other way around. Each company claims its relationship with the other is small, financially. To some degree, for TrueCar, it depends on whether the break-off in relationship represents a precedent. The relationship ceases at the end of July.

TrueCar management announced:

TrueCar’s marketplace gives consumers transparent insight into what others paid through its analysis of anonymized transaction data and access to guaranteed savings off of MSRP from its nationwide network of more than 10,000 TrueCar Certified Dealers. This network is committed to a new way of selling cars to the approximately 6 million in-market monthly prospective car buyers who use the TrueCar platform (including through USAA, American Express, Consumer Reports, AARP and others). These dealers abide by certain core principles:

  1. Provide negotiation-free, guaranteed savings off MSRP for all vehicles.
  2. Provide prompt and accurate inventory and sales data.
  3. Deliver a transparent, professional, and hassle-free customer experience.

AutoNation CEO Mike Jackson told The Wall Street Journal:

TrueCar generates about 3% of the 550,000 cars we sell annually, but they want all our customer information on every car we sell and we just can’t agree to that. It is none of their business who our customers are.

In an age during which data represent the key to targeting customers, TrueCar needs information on buyers to effectively attract users to its platform and offer data on those users to its dealership partners.

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The risk the decision represents it that other dealers will then say that the same flow of information may undermine a portion of their businesses. AutoNation has the largest chain of dealers among any such company in America.

For TrueCar to be badly damaged, huge manufacturers like Ford Motor Co. (NYSE: F) would need to express their concern to its dealers about the e-commerce company’s practices. Likely, they will make that decision soon based on AutoNation’s criticism.