• by Karl Greenberg , November 14, 2010

TrueCar is hoping to change the way people use the Web to shop autos. The consumer-facing site, TrueCar.com, which focuses entirely on showing real-time pricing of vehicles from aggregated data it buys from dealerships nationwide, is extending into the used car market this month.

The company plans to launch by year's end a Web site called ClearBook that likewise aggregates what other used car owners are asking for their vehicles. ClearBook will vie against Kelley Blue Book (KBB), now owned by AutoTrader.com, the National Automobile Dealers Association Guide (NADA) and Black Book (Hearst) guidebooks.

Scott Painter -- the founder and CEO who also founded, then sold, CarsDirect.com -- says his goal is to eliminate lead-generation as a web model for the auto market. "Today most people use the Internet as way of researching, and the Web gets an A-plus for disseminating good product information online," he says.

But he adds that while the traditional model for third-party sites is selling leads to dealers, he is hoping his model of doing things -- taking a percentage of actual sales -- will be the wave of the future, and that showing live pricing trends will also solve problems for dealers, and consumers.

For consumers, he says, pricing based on dealer data adds transparency to a notoriously murky process. "We all have very little trust for car dealers. And I think if you examine why, it's because at end of day there is asymmetry in terms of product valuation. The web has been great for product information but not as a source of transparency about price."

Per Painter, pricing transparency as a central driver for a commerce web site helps dealers because they are getting consumers through the site who are at the bottom of the purchase funnel; otherwise they wouldn't be comparing prices. "Simply being online is no longer a marker for whether someone's in market," he says, adding that by the time people are looking at what other dealers are charging, they are ready to pull the trigger, not just idly pricing.

"When most people are given a price from a dealer, they tend to call two or three other dealers to triangulate. We have found that about 95% of these people are trying to make sure they are not getting screwed. And when someone is looking for price confidence, it's one of the strongest indicators of in-marketness. It's one of the last indicators before purchase."