California car buyers might benefit from understanding more about AutoNation Inc.’s decision to sever its relationship with TrueCar. The change results from a dispute over TrueCar’s request that AutoNation share customer data for all of its transactions, not just the ones associated with TrueCar. AutoNation rejected the request, and informed TrueCar on July 9 that their contract is set to terminate at the end of the month.
On July 10, AutoNation revised the statement and moved the termination date up to July 15. As of July 9, nearly 95 percent of AutoNation’s dealerships utilized TrueCar’s internet car-shopping service. Back in April 2014, AutoNation executives indicated that investment in third-party services could eventually decline due to the growth of its own Internet presence. However, some insist that the termination was attributable to the unprecedented request made by TrueCar in the latest contract negotiations. The CEO of TrueCar described the two companies as having philosophical differences.
The CEO also claims that TrueCar provides consumers with more transparency, while the AutoNation sales approach is based on a more traditional model. AutoNation claims the request included 41 data points on 550,000 vehicles, while TrueCar is responsible for less than 17,000 sold per year. While AutoNation claims TrueCar has no rights to the data, TrueCar contends that the issues were more about enforcing compliance with terms governing data-sharing. TrueCar has already had contracts terminated with more than 350 other dealerships within the past year over these same issues.
Successful enterprises typically rely on guidance from legal counsel whenever significant contract disputes are imminent or underway. Lawyers may be prepared to head the negotiation process and help mitigate any adverse consequences that could be detrimental for future profitability or growth.
Source: Auto News, “AutoNation drops TrueCar in contract dispute”, Amy Wilson and Neal Boudette, July 9, 2015