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More auto shoppers relying on the Web for research

Websites operated by, Kelley Blue Book, TrueCar and others based in Southern California are thriving as consumers increasingly turn to the Internet to determine what vehicle they want to buy and how to negotiate the lowest price.

October 06, 2011|By Jerry Hirsch, Los Angeles Times

Scott Painter, chief executive of TrueCar, sees the industry moving in the same direction. But he believes dealers will have to make even more of a change and become comfortable with the fact that their products are "just commodities." Once a shopper settles on a specific model, he said, whom they buy it from makes little difference as long as the price is low.

"The BMW 5 series you buy in Beverly Hills is the same car in Kansas City," said Painter.

Shoppers scanning the TrueCar site have free access to data about closed sales by model and options and other pricing information that they can use to negotiate a purchase or to validate whether dealer offers through TrueCar will save money. Dealers pay TrueCar $299 for each completed new vehicle sale.

Painter believes the information available to consumers via the Internet these days is placing fixed price transactions on the fast track.

Dealers and even entire car divisions, such as General Motors' defunct Saturn brand, have tried such pricing as a way to reassure buyers that they aren't being gouged, but it has never become more than just a slice of the business. In the end most buyers go back to the haggling that has ruled car sales for nearly a century.

And while buying systems such as TrueCar might enable consumers to bypass haggling over car prices, shoppers still need to be careful. They must still dicker over the value of a trade-in if they aren't willing to sell their old car privately. And buyers will still face pressure from the sales staff to purchase extended warranties, special paint coatings, anti-theft tracking devices and other dealer add-ons.

Some dealers see TrueCar as an important sales channel. Mike Maroone, president of AutoNation Inc., which operates 254 new-vehicle franchises in 15 states, sits on the company's board of directors.

But others aren't convinced the practice of auto selling is going to change as much or as fast as Painter predicts.

Beau Boeckmann, vice president of Galpin Ford, the nation's largest Ford dealership, said he disagrees with the concept that an entire — and often complex — car transaction can be conducted online.

"I would also venture to say there is more to the deal than just the price," Boeckmann said. "There is the financing aspect, the trade-in, customer service, building a relationship with a business in your community — all things that aren't just the lowest price thrown out on the Internet."

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