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...
- 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".
- 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.
- 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. - 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.
- AMEX, USAA and all of their affiliates do not want the bad consumer relations this push back is creating with their members and customers.
- 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.
- 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"
- Keep calling your National and State Dealer Associations demanding they get involved and stay involved... No excuses.
- 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.
- 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
Comment
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Comment by John Miller on December 8, 2011 at 4:54pm -
Good Point,
This is not the only Aggregate Search site that is potentially damaging to dealerships. True Car is working to provide a transparent means of exposing low price facts about new car models. And as You point out this could be good or could be bad; Hell, an invoice worksheet in the wrong salesperson's hands will cost gross.
True Car (for now) places focus on helping Buyers, instead of justifying their existence with MISLEADING VDP's
Better The Devil You Know?
Time Will Tell.
-JM-
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Comment by Mike Warwick on December 8, 2011 at 4:27pm
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Great points Pete. I guess my main concern is the 10%ers becoming the new norm. We got 689 Truecar leads in November for our two Nissan stores. That represented 30% of those store's total lead volume. The Truecar ad blitz is only 6 weeks old. Where are we going to be six months from now after Truecar's IPO? I hope you're right and this is another blip on the Internet radar but my gut tells me it isn't. As Painter loves to point out, "he speaks investor" and is lining up some deep pockets to back him. This guy thinks he's going to be the next Steve Jobs who completely transforms an industry and the way products are delivered (think music and local record stores.) Everyone loved Steve Jobs and no one seems to lament the disappearance of record stores. I suppose that's the price of progress but I don't remember the record stores sending iTunes their customer lists and a fee to help drive them out of business.
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Comment by Pete Obuchon on December 8, 2011 at 3:21pm
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Mike W. - I understand what you are saying and I agree that they suck but isn't the ad in today's Herald a guaranteed price by a reputable dealer? Do you still get a shot at those customers when they call you or walk in your showroom? Is it really that dificult to explain to a customer that the price that is sitting right there in black and white is not a real price. If you can't convince them that the price is a gimick, do you really want the or are they just a 10%er that we always knew was out there? I'm really just thinking out loud on this so don't take it personally anyone...
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That was my point. It's just like a customer walking in with another dealer's ad. I would be more worried about the customer that you have that's a lawyer whos data just got skimmed off of your DMS without their knowledge. We all need to look at our privacy statements that we get the customers to sign and make sure that we are covered for the rain of lawsuits that wil be coming from consumer groups for us "selling" their data for -$299 per sale! Those consumer groups all love us don't they? Aren't we smart?
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Pete, you're assuming that you will have the opportunity to have your salesperson explain what the Truecar dealer is going to do. If the customer visits Truecar and gets what they believe to be a great, transparent price, why are they going to visit you? Worst case, you never see them because they go to a Truecar dealer. Best case, they have their guaranteed price in hand and when you start explaining what the "transparent" dealer is going to do to them, they walk out and go to that dealer. Remember, they've been brainwashed by Truecar to believing that if you won't honor that upfront price, you're not a transparent, honest dealer. I'll give you an analogy - think about the Carfox. If you offer an Autocheck instead of a Carfax, you're not a reputable dealer. Same idea. If you don't honor a Truecar price, you must have something to hide.
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Comment by Keith Shetterly on December 8, 2011 at 3:07pm
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@ Pete, very good point about the training aspect. Jim K was just talking to me about that on the phone today, too. I think it's a very big deal for these leads, because whether you are a subscribing dealer or not you will still see them.
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Keith- I understand his agenda. It is to put all of us out of work. Don't mistake my comments, I am definately anti-Truecar. I am just saying that the certificate that the customer prints out is no more than a glorified newspaper print ad. The objective is to swich said customer off of the ad car, take a trade and get the financing... I know Mike's market (I worked for his biggest competitor for years (The big "Q") designing their print ads to get customers in with the lowest prices which nobody qualified for when they walked in the door). You will never stop dealers from price advertising and Truecar is doing it on behalf of the dealers that are paying them. I agree that the dealers are buying Truecar the bullets for the gun that will eventually kill them but we as a group can't see the forrest through the trees. As a group, we are more interested in what's happening today and aren't as worried about what is going to happen tomorrow. For now, we need to train our salespeople how to handle a truecar customer when they walk in the door with the other dealer's certificate so that they know what we want them to do. I dare any owner/GM reading this to walk up to their 8 car salesperson (the one standing by the smoke shack drinking a cup of coffee) and ask him what Truecar is and how they would handle a customer if they came in with a quote. Go ahead I dare you to... but I bet you won't have the stomach to because you don't want to know the answer. It's easy to demonize Truecar, and I agree that they suck, but it still comes back to training our people!
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Comment by Mike theCarGuy Correra on December 8, 2011 at 2:59pm
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Mike Warwick has it right on, the issue with ZAG is not about HOW we deal with customers coming in with low ball prices because yes, we deal with that all day every day and yes each of us has glory stories of how strong we are and how we have trained our sales force to overcome low ball prices etc etc etc... ZAG exploits the existing fear of car dealers that consumers have and plays on it with the promise of all the perceived 'secrets' revealed. There is no other business that could exist if there were companies revealing true costs and fully promising consumers a purchase of a product for less than a company paid for it. I cant search online and find the actual cost of a gallon of milk and then play multiple grocery stores against each other in a price war and expect those stores to stay open very long. TrueCar is currently showing a 'good price' of $19,610 for a 2012 Honda Accord LX w/Auto today. Invoice on that car is $21088, holdback $443 and theres $500 dealer cash so a break even deal is $20145. Yes, dealers choose to join the ZAG program, and by that reasoning its our fault however as I have said before ZAG is a very controlling 'partner' and fully dictates where THEY want pricing to be. When a dealer logs into the ZAG site, there is a list of all models with the ZAG market range + or - from invoice, if you arent within the guidelines they will let you know quickly. CostCo, Auto Club and many other buying programs negotiate on consumers behalf for pricing but the unlike ZAG they arent telling those consumers that dealers are indeed evil liars and have all kinds of hidden profits but you should trust us because after all we know all their secrets. In addition they are acting as brokers and referring customers to specific dealers for a fee when the deal is made, but ZAG has yet to send over a brokers license or even claim they have one.... problem? Anyone from the State of CA paying attention here?? Of course beyond dictating dealer price policy there is the much discussed issue of the gathering and potential sale of customer information that seems to be legally questionable at the very least...
BTW, much like the Alpha Dog I too have been notified that I wont be getting a Christmas card from TrueCar this year. Sorry if I have ruffled some feathers but this is an issue I feel pretty stongly about as I have been passionate about this industry of mine for over 20 years and my family relies on this business but it wont BE a business the way ZAG is pushing it. Besides, with folks like the Alpha Dog and Jim Thibeau on the ZAG naughty list I think I'm in pretty awesome company and honored to stand with these folks. Michael A. Correra Automotive Sales Proffessional since 1987 and passionate car guy.
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Comment by Keith Shetterly on December 8, 2011 at 2:42pm
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@ Pete, if you watched that video and understand his agenda, and his recent $200million financing headed towards a billion dollar IPO, did that not change your position? This isn't going away, and selling better isn't going to get around it. A tide a few inches over a dealer's toes isn't high; across a nation of dealers (about 1/3 on TrueCar/Zag now, according to them) that is a huge wave down the beach. Thanks!
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Mike- I understand what you are saying but how many of those customers aren't going to have a trade, won't need financing and won't go through your normal desking process? What this is going to take is an educated salesperson that can explain that the Truecar dealer is just going to sandbag the trade or jack up their rate. How many $800 loser deals will that dealer actually do before the owner cans the GM, GSM, ISM or all three? It will get through one or two fiancial statements and that will be over... Last time I knew we were still all paid on GROSS!
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