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TrueCar aims to foster hassle-free auto deals

TrueCar Inc., through their website, publishes data on actual auto sales alongside listings for similar new and used vehicles, allowing shoppers to lock in good prices while preserving dealer profits.

size annually, with revenue in excess of $100 million, "and we anticipate the ability to double the size of the business every year for the foreseeable future," Painter said. The company drives 1.4 percent of the 15 million new cars in the United States market, he said.

Painter said about 26 percent of US dealerships participate in the program. If the business keeps growing at the current rate, TrueCar will need 30 percent to 35 percent of all dealerships, "and that will represent national coverage," he said.

TrueCar appears to have regained its footing after a backlash from dealers that hit the business in late 2011 and early 2012, causing regulators in several states to take a look at the company and prompting significant changes. The Wall Street Journal detailed the fracas, saying TrueCar's "disruptive" service "nearly drove it out of business."

In January 2012, after a "listening tour" with dealer groups and manufacturers, the company announced "a nationwide, multi-faceted strategy to tackle regulatory compliance issues and demonstrate its commitment to state regulators, state dealer associations and to better serve its dealer partners."

TrueCar substantially revised its business model, including the website experience and dealer billing methods in certain states, to ensure compliance with all applicable laws, a spokesman said via e-mail. There are no known open regulatory issues or inquiries from regulators, he said.

TrueCar last year also formed a national dealer council, a group of auto industry veterans and dealers, including those that don't participate on the platform, to work with the company. The company said it would preview major policy, product and process changes with the group. It also hired a vice president for dealer development to build and strengthen dealer relationships.

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Phil Bonfanti, general manager of Lakewood Fordland in Lakewood, Colo., near Denver, and member of the TrueCar dealer council, said the company's transformation made it more dealer- and customer-driven. In the past five or six months, Lakewood Fordland's Internet customer traffic is up about 20 percent, he said.

"We found TrueCar to be a very positive means for us to do business," Bonfanti said.

"Price is the easy part of our business. The tougher part is to find the customer the right vehicle for their lifestyle," Bonfanti said. TrueCar helps make price a nonfactor by establishing a "very, very fair" price, he added. "It's helped us tremendously by taking the doubt out of the pricing arena."

Working with TrueCar "helps us build better rapport with our customers, it helps us to better satisfy our customer wants and needs," Bonfanti said. Dealers want customers to have a good feeling about their businesses down the road, he said. "TrueCar helps bridge that and helps us and the customer focus on making a very big ticket purchase."

Koslowski said TrueCar is is not as aggressively disruptive as it tried to be with its original business model. The company is alleviating some angst for consumers while easing concern by dealers.

As with any Internet platform, he said, "consumers really need to ask themselves how much better (off) they are," as the site doesn't necessarily provide the ultimate best price, although it gives consumers data to help them feel more confident.

TrueCar needs to do more to communicate its new value proposition to both consumers and dealers, Koslowski said. He expects the company to keep striving to improve data quality, attracting more consumers and dealerships to become almost a clearinghouse for auto industry information.

Painter said the company has no direct, damaging competition now, but he expects others to enter the space, as "it's just too big of a market" for others to ignore. TrueCar, which is well funded, is focused on growth and profitability for now, and eventually should go public, he said.

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http://www.cnbc.com/id/100582285

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