TRUE CAR and ZAG Cyber Bandits, Parasites or Good for the Car Business?

Jim Ziegler asks...

I am hearing a lot of discussion about True Car and ZAG.  I continually scratch my head and wonder if  desperate dealers are doing the marketing limbo "How Low Can You Go?" 

Are we so bad at what we do that we have to line up and pay vendors to lose money? AND, who is giving these people access to your data that is used against you? 

 

Who owns these companies and what might be their ulterior motive?  Sometimes I ask questions to which I already know the answer. 

 

Am I wrong?


What do you think... JIM

 

 

Jim Ziegler's Guidance and Recommended Action Plan:

Ten Areas We Need to Concentrate on to Bring This Monster to It's Knees...

  1. Government investigation of ALL Data Aggregators taking consumer information from dealers' DMS. Sadly enough, dealers who do business with TrueCar are exposed to  liability charges. Cut off all access to unecessary data, no matter who takes it from the dealers DMS and make it illegal to "resell identifiable consumer data" and "transactional data".
  2. Educate Your Fellow Dealers; If anyone takes financial transactional data, they expose the dealer that allowed it to violations, especially if it is passed on to other vendors or shared.
  3. Educate Consumers to what they're doing with their information...
    a. You buy a car from a dealer, do you really want your personal information, and maybe even your financial information, passed along and sold and shared by "God knows who?"
    b. These People Charge the Dealer $300 which the dealers have to build into the deal
    c. Your Privacy and the Security of your Information could theoretically compromise your identity if you do business a company that takes data from the dealership.
  4. Educate Investors and potential investors they could possibly be mislead if anyone is telling them this is a safe investment because of all of the dealers pushing back, associations pushing back, and government regulators in many states coming after TrueCar's business model as NOT compliant, in some cases they're saying it is Not Legal.
  5. AMEX, USAA and all of their affiliates do not want the bad consumer relations this push back is creating with their members and customers.
  6. Cancel your dealership's Affilation with TrueCar. Tell people with TrueCar certificates that YOU don't honor TrueCar and you feel the company is NOT reputable. Educate consumers as to perceived data exposure if they buy from a TrueCar dealer. Make sure that each consumer knows that using TrueCar actually increases their vehicle cost by $300 to $400.
  7. Make the dealers selling at huge losses take all of those deals. Big problem right now is too many Nissan Dealers and others are taking huge losers to get the factory money. The TrueCar reverse-auction business model will continually push those numbers down until the factory money is non-existent. Consumers need to hear from many dealers, "We don't do TrueCar"
  8. Keep calling your National and State Dealer Associations demanding they get involved and stay involved... No excuses.
  9. Get the Manufacturers into the game. If GM, Ford, Toyota, and other majors change the rules about how we advertise and do business to protect the dealers, we can cut off their ability to set pricing. So keep it up at every dealer meeting. Call your Dealer Council Members and protest to your factory reps. Tell the manufacturers, if they want showroom and facility improvements, we need the ability to make fair profits.
  10. Tell everyone you know. Educate other dealers and industry people. Watch the Painter interviews... I believe this is the first time a vendor has publicly announced they intend to bring down the dealers and hijack our business, taking our profits and starving us out with our own data. Painter has said manufacturers and dealers should go bankrupt and he, in his God-like way "will control distribution..."
    When the TrueCar-Yahoo Deal kicks in we need to stand firm and "Just Say No" we don't honor TrueCar deals.

Read this article as a reference: http://www.autonews.com/apps/pbcs.dll/article?AID=%2F20110831%2FFIN... 

AND, if you doubt the mission... read this...  http://www.zag.com/websiteASSETS/whitepapers/ZAG-WhitePaper3.pdf

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Comment by Steve Richards on October 23, 2013 at 8:43pm

I'm watching TrueCar (and Costco, ZAG, AMEX, USAA, etc.) eliminate "selling". That is the "selling" of the vehicle. Does sales training need to focus on the "adds" (body side molding, mud guards, wheel locks, etc.?). In many stores if the sales person can't upsell those type products, it is yet another mini deal. I'm beginning to think this IS the FUTURE. And it's here now. Am I thinking right?

Comment by Michael Paulson on June 29, 2012 at 10:45am

It seems like TrueCar is moving closer to a model that is workable for dealers.  I am consulting for a dealer that is getting a significant amount of TrueCar leads (a battle that I lost) and spoke with the rep at length.  They have/are planning on getting rid of the dealer cost component.  That will definitely help.  It seems from the conversation that they are landing at reporting historical sales data and quotes that dealers have offered in the portal backend.  They have a warning message that is intended to display to the customer if a crazy deal is offered.  I asked if it was possible to lock out under invoice deals (net after incentives).  At this point, they have gone to a model where dealers have to call their TrueCar rep if a deal falls a specified amount under invoice.  The TrueCar rep is tasked with talking them out of it.  I believe the number was $2400 under invoice or something like that.  I feel that TrueCar is now a victim of its beginnings.  The dealers have the expectation that to be on the site, they have to give unsustainable deals.  I suggested a series of training videos aimed at the dealership Owners/GMs designed to encourage a rational pricing approach.  This approach is reportedly in the works.  Any changes will be gradual in this area as long as there are still dealers willing to go for broke.  The example given was Nissan where stairstep money can be used to toast the competition.  Bottom line:  I still feel that the business would be better off without TrueCar, but there is movement in the right direction.  They still have a basic conflict in that the parties that benefit the most are not the same as those who are paying for their service.  If they don't continue to move, this will eventually catch up to them.

Comment by Stanley Esposito on June 29, 2012 at 10:07am
Looking for an update. What is the latest news from truecar? It seems like the truecar fad is over. I don't have customers bringing in the printouts anymore.
Comment by James A. Ziegler on May 3, 2012 at 8:45am

My apologies for my lack of visibility here recently. I had to deal with some issues following my March surgery which took precedence.

I am now back up at full speed and ready to continue to address the challenges we're all facing. I have painfully labored over my lengthy report I am writing titled... "Data Wars, Battle of Armageddon" addressing the vendors and data pirates in the auto industry. 

Although TrueCar will be a centerpiece, it will go deep and cover the entire gamut of data misappropriation and misuses. I can predict with authority a bigger response than the TrueCar issues received originally. JIM

Comment by Jay Prassel on April 16, 2012 at 1:08pm

NADA, J.D. Power Form Strategic Alliance
Alliance Will Provide Industry Leadership in Vehicle Marketplace Data

http://www.autoblog.com/2012/04/12/nada-j-d-power-shack-up/

Comment by Keith Shetterly on April 12, 2012 at 11:02am

I am personally, for now, going to need to at least pause my discussions on this blog.  I'm investigating a relationship with a vendor, and I don't want anything I write to be misconstrued in that process.  There are no data issues with this other company, as they don't use 3rd-party data nor involve the DMS.  Good luck to all of you, and if this falls through then I'll be back!  Just being ethical.  Thanks!

Comment by David T. Gould on April 11, 2012 at 5:12pm

@Criss, Well said. (Keith takes it so much better from you!)

My hat is off to George and his ownership @ Thoroughbred Ford for showing all a way dealership data exposure can be better contained.

Comment by Keith Shetterly on April 11, 2012 at 5:00pm

I love that "tail wagging the dog" analogy.  I use it all the time.  Great post!

Comment by Criss Castle on April 11, 2012 at 4:59pm

@Keith, in response to your question: "If the data was stopped today, via DMI or otherwise, would we make more or less sales?"  Having a data thief in your DMS isn't going to help you sell more cars. We are going to sell them regardless if their hand is in the cookie jar or not. Consider though the negative activity, if the companies are engaging in the selling of data and most dealers have customers sign privacy policies stating that their information will not be sold, who then is liable for this misrepresenation? The dealer? The vendor? The data management company? It will be the dealer who faces the music because it's those people on the front line that collect the signatures, present the information and the contracts are signed at the dealership. Then it will be up to the individual dealer or the large dealer group to sue the vendor. 

We don't need to supply companies like DMI with this information. If their business model is based on this data, then the automotive industry has the upper hand and hasn't used it. We're so busy focused on the car deal (and there is nothing wrong with that) except that it's almost like Gollum with some dealers. They are so focused on the "precious" car deal that they don't pay attention to the rest of the business model. Why have we been so blind? Really, it's like these vendors have been directing our business  -- the tail wagging the dog. Hats off to Thoroughbred Ford for stopping it at their store! Really. That is a testimony to the dealer principal to take a stand and the team to carry it out.

Comment by George O'Sullivan on April 11, 2012 at 4:03pm

@keith certainly there are plenty of benfits that DMI and the like can provide us as a dealership, to make my life easier.  There is no question that I as a dealership can benfit from them.  Here is the problem as I see it, we let them in (not) just DMI, but all the bigger companies too ADP, R&R, etc. What they found is that whent they were in there, they found they could get other stuff, pull the Personal Information out and now they think they own it. So they resell it.  We let the fox in the chicken coop and now they are taking our profits, there is no doubt.

The biggest problem is that these companies have come to rely on the information flow.  Most of the big companies have not used it against us the way that Truecar has, they just nibble at the edges, like the pirahna's they are.  TrueCar and there will be other companies of that ilk, have used the data to come at us full force.  Since these companies are reliant on the data flow and thus the financial rewards that they are earning from our data, they will find a way to continue it.

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