Contract fight ends with auto dealers breaking ties

Maryland drivers in search of new vehicles may to reassess their buying options following a split between TrueCar Inc. and AutoNation Inc. According to reports, the firms are set to end their partnership, and the breakup is projected to impact more than 200 AutoNation dealerships that employ TrueCar services. TrueCar, which provided sales leads to AutoNation and other companies via its web portal, was accused of requesting large volumes of consumer purchase data, and it also faces a number of lawsuits brought by other parties in the retail auto business.

News sources say TrueCar is well known for breaking ties with dealerships that refuse to agree to its data-sharing terms. The company, which had already come close to shutting its doors in 2012 as a result of investigations by authorities in several states, continued to push for contract provisions demanding that AutoNation hand over customer information about every one of its transactions, regardless of whether TrueCar was involved.

An executive noted that TrueCar also made it more difficult for AutoNation dealers to contact customers via email or track the sources of leads. The company said that sharing its customer databases could represent a conflict of interest that might reduce its own profitability. The most recent agreement between the two companies had reached the end of its stated term and had been subject to month-to-month extensions.

Companies that want to end business relationships or change the way they operate have to be careful to abide by the terms of their existing agreements. Those that fail to do so may become entangled in contract disputes that could disrupt their normal operations. Many that are in this position seek the advice and counsel of business law attorneys.

Source: Automotive News, “AutoNation drops TrueCar in contract dispute”Amy Wilson and Neal Boudette, July 9, 2015

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