The California New Car Dealers Association and a popular Southern California car-buying site have announced that they have settled long-standing litigation.
The CNCDA, which is based in Sacramento and represents more than 1,100 dealers, originally filed a lawsuit against Santa Monica-based TrueCar Inc. in May 2015, contending that the latter’s automotive pricing and information website violated state law. TrueCar charges fees to participating dealers who offer cars for sale through its website.
CNCDA also contended that TrueCar was violating California Vehicle Code sections requiring vehicle dealers and brokers to be licensed, and that TrueCar had produced false and misleading advertising, and engaged in unfair competition. The CNCDA alleged that TrueCar’s advertised claims of “no surprise or hidden fees” were false, because TrueCar received a fee on each sale made through its website.
On Thursday, CNCDA said that TrueCar “has agreed to transition its billing model in the state of California from one in which dealers pay the site a fee on each car sold to a flat-fee subscription model by Jan. 1, 2019.” TrueCar also agreed, the CNDCA said, to double the indemnity it provides to California dealers who participate in the TrueCar program.
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The litigation dragged on for months, with a TrueCar motion to dismiss and amended complaints filed by the CNCDA.
In a statement, CNCDA President Brian Maas said: “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.”
In a separate statement TrueCar CEO Chip 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.”