Dallas, Texas 07/10/2015 (Financialstrend) – AutoNation, Inc. (NYSE:AN) is to cut ties with TrueCar Inc (NASDAQ:TRUE) at the end of the month after they failed to reach an agreement on a four-month running contract dispute. AutoNation, Inc. (NYSE:AN) CEO, Mike Jackson, has already said they plan to shift their attention to their online storefront and other third party providers to sell vehicles completely ending ties with TrueCar.
Resentment over TrueCar Requests
The bone of contention on the contract dispute was TrueCar pushing to have access to all information related to consumers that AutoNation sells cars to. Mr. Jackson maintains that TrueCar Inc (NASDAQ:TRUE) has no rights to have access to information related to customers it serves. Dealer groups are mounting pressure on TrueCar alleging it violates various car sales regulations.
TrueCar Inc (NASDAQ:TRUE) which generates as much as 3% in earnings on more than 550,000 cars that AutoNation sells annually uses its technology and internet presence to direct potential car buyers to various dealerships. The company can generate as much as $400 in fees from dealers should a referral lead to a direct purchase.
The standoff between the two companies is just a reflection of the ongoing dispute between auto dealers and third-party referral sites. Dealers have been developing their own web-shopping tools with a view to reducing their reliance on third parties
TrueCar Inc (NASDAQ:TRUE) on its defense maintains that all certified dealers should share a limited supply of vehicle purchase data. CEO, Scott Painter believes the information is important for ensuring up-to-the-moment accuracy in pricing for individual regions
The loss of AutoNation partnership should be a big blow for TrueCar Inc (NASDAQ:TRUE) which has come under immense pressure from the investing community for providing misleading information on how it carries out its operations. A lawsuit filed by investors alleges that the company provided false statements on its compliance with state laws. The investors allege that, as a result, they have incurred losses since the company went public.