TrueCar, Calif. dealers settle litigation

Chip Perry, TrueCar. Photo courtesy of company.

More than two-and-a-half years after the suit was filed, TrueCar and the California New Car Dealers Association have settled the litigation between the two parties.

In a statement released Thursday afternoon, TrueCar said as part of the resolution, its billing model in California will transition to a flat-fee subscription model — as opposed to the from the pay-per-sale model with a cap — by Jan. 1, 2019.

The new model will in the state also not have the “sales guarantee” as a retroactive adjustment mechanism, the company said.

Additionally, TrueCar has agreed to double the indemnity provided to its dealer partners in the state.

The suit was initially filed in May 2015

TrueCar has since gone through a well-documented overhaul of how it conducts business with dealers, including a Dealer Pledge launched in early 2016 by newly minted president and chief executive officer Chip Perry, who arrived in December 2016.  

Commenting on the CNCDA settlement in a news release, Perry said: “TrueCar is pleased that the litigation has been resolved to the parties’ mutual satisfaction, and we look forward to continuing to serve our dealer customers in the State of California.”

CNCDA president Brian Maas added: “This litigation afforded us the opportunity to thoroughly examine TrueCar’s user experience and business practices.  The agreement reached with TrueCar, together with the other adjustments to its business model made by TrueCar after CNCDA initiated this litigation, satisfactorily resolve our previously expressed concerns regarding the existing TrueCar business model, which is currently a pay-per-sale model with a cap.

“We also believe that through the doubling of the indemnity TrueCar offers to participating California dealers, we have procured another valuable benefit for our members through this litigation,” Maas added. “We are pleased that we are now able to put this matter behind us.” 

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