AutoNation, the biggest new-vehicle retailer in the United States, notified TrueCar, an online car shopping service, that it is ending its partnership as of July 15, 2015, following a lengthy contract dispute. Auto enthusiasts in Kansas might have become aware of the impending split when the CEO of AutoNation said in April 2014 that the company intended to distance itself from third-party providers, accusing TrueCar of prompting the move.
There are 240 AutoNation dealerships across the country, and 226 of them used TrueCar services. The company’s CEO blamed the Internet business for making unprecedented, unacceptable and unconscionable demands during its new contract negotiations. He took offense to TrueCar’s demand that AutoNation give it the customer data for all vehicle transactions rather than only the transactions related to TrueCar, which amounts to just 3 percent of total AutoNation sales.
The founder and CEO of TrueCar, however, paints the end of the partnership in a different light. He says that the company gave AutoNation a clear choice and demanded that it comply with the data-sharing conditions. This was a deliberate step, he added, and TrueCar has terminated its partnerships with more than 350 other dealers over the past year because they did not adhere to the terms. The company is partnered with more than 11,000 dealerships in the nation.
The two companies were negotiating a renewal of their latest contract after it expired on March 1. The negotiations had been ongoing since fall 2014, and after the expiration, the partnership continued on a month-by-month basis. The contract dispute has prompted AutoNation to build its own Internet shopping service to reduce its dependence on third-party providers such as Cars.com and AutoTrader.com.
Contract disputes often become protracted and could lead to litigation if not promptly addressed. Those who are involved in such issues might seek the assistance of business law attorneys in reaching a settlement.
Source: Automotive News, “AutoNation drops TrueCar in contract dispute,” Amy Wilson and Neal Boudette, July 9, 2015
