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 Jerry Thibeau on November 29, 2011 at 2:49pm

Thanks for the comments.  I purposely left off the SEO.  I also made the video viewable only by possessing the link.  If the general public latched on to this video, then it would only help True Car.  It would paint the automotive industry as the evil empire and True Car as the savior to Mr. John Q. Public.

Unfortunately what a lot of people don't understand is that the automotive industry fuels our economy.  I've heard one in every 4 jobs can be related to the automobile industry.  I am not sure if that's true or not, but it makes sense to me.  Tinkering with the dynamics of how we sell cars will not be good for the millions of people who retail vehicles.  True Car is a destroyer of Capitalism!  If allowed to survive, all dealers will become servants to True Car.  Dealers are paying True Car to destroy what they and their ancestors have spent decades building. 

In response to some of the comments:

"Make it up in the back end or on the trade"  What do you think True Car will be coming after next?  They'll have the cash to do it as well.

"6000 dealers can't be stupid"  I bet a lot of them have no clue what they are involved in.  Internet manager tells the GM, "hey boss, we need to be on True Cars because ABC Motors down the street is using them.  The leads are free, we only pay if we sell.  Okay that sounds reasonable, make it happen."  You know how many GM's are afraid of the Internet or don't understand how the dynamics of the Internet has changed our industry?  Our industry is littered with people who just don't get it.  So yes, there is a lot of stupidity out there.  Sorry folks, but that's the truth.  Most of you who troll these informative sites can exclude yourself from that last comment since you are here to improve the way you do business.

Back to teaching people how to answer the phone I am!  Have a great day everyone!

Comment by CJ Romig on November 29, 2011 at 2:44pm

Just posted a $3341 True Car/Zag lead on a new Cadillac SRX...A couple of weeks ago we did a $7,331 deal on a Mercedes Zag lead...

Before the naysayers erupt, we did hold on trades and secured the financing on both deals. Believe it or not the customers actually changed their minds on the original selection.
I had worked plenty of deals through our internet in Chicago where the margins are depleted way before a customer walks through our doors. I do my due diligence every month and seek out quotes from the competition to see the word tracks, the response time, and mostly the price that is being quoted with all the freaking disclaimers! Zag just gets them to the bottom line quicker and yes, I hate that a lot. Try to get quotes in Chicago on a new Honda through a DEALERS website! Never-ending…. People have been bitching about internet leads even before the internet! I welcome and track every lead as more kick ass opportunity to do business!
Every month we go through a ROI meeting on all of our lead providers and make decisions on what we are going to do, who we are putting on notice and who we put on triple secret probation.
If it doesn’t work for us then we drop them. Easy as that...So far True Car/Zag has penciled out for us since we started using them 7 months ago.
This month we have sold 9 Zag leads, most of them are nothing deals but we usually get a nice trade once in a while and it's nice to have a customer come in to our dealership that has never been here before. I ran into a customer a few weeks ago in our service department and they did not even buy the car from us because they wanted more of a discount but they thought our service facility was awesome so they brought in another car for service.
Like most of you reading this, I just want to have more prospects on the floor and I trust my sales managers will work the deals the right way and if they get handcuffed on a tight deal that was posted on Zag with no trade and no chance for financing then we move forward and take the deal. Activity breeds activity. I am pretty sure there is a lot of advertising money being blown on worse campaigns without the benefit of knowing what worked and what didn’t.
Maybe I have the benefit of being in a bigger store so I can absorb the nothing deals but at the same time I am pretty sure we all wish we had more traffic coming into the dealerships.
Right or wrong, I’m pretty sure of my salespeople like the hell out of the True Car/ Zag leads every time they deliver a car.

(For now)

CJ from top of the soap box…

Comment by Mike Betts on November 29, 2011 at 2:33pm

next up 3% profit margins between MSRP and Invoice.

Comment by Stan Sher on November 29, 2011 at 2:14pm

I just wish that Jerry could employ some Video Search Engine Optimization techniques for that video.  Jerry, contact me for some advise on that.

Comment by Joe Clementi on November 29, 2011 at 2:12pm

@Jerry.  Boy did you nail it!  The most important part of this is the lasting image that the customer has. "Wow, I just saved $1,000, that other dealer was trying to rip me off?"  Can you see it clearly now?????

What message are we sending to our customers?  The cheapest value wins the car deal?  Mr. Painter say's As a result, "he believes dealerships will move toward fleet-type sales where buyers just sign paperwork, pick up their keys and go.  No high pressure, (AND HERE'S HIS KEY POINT) "highly compensated salesperson required"    TO DO WHAT???  To sell cars below costs? To be a waiter? What, now we're going to tip 'salespeople' to take the order for a car? 

I hope all the dealers will send this post along to their business associates, to the NADA and to LinkedIn so that others can read this thread.  We need voices to stand up for our business!

Dealers utilizing truecar.com are posting prices online for all who wish to see; at prices not allowed under our
DMA agreement.  These prices are so egregious that they strike at the very issue of price fixing.  Dealers that participate are using this site to post pricing below invoice thus damaging the brand and quite frankly, my franchise value. 

While I don’t agree normally with factory interference, this matter deserves all the attention it’s
creating. The industry can no longer turn a blind eye to this menacing process of devaluing our brand. We’re suggesting that the playing field be equalized by enforcing the rules NADA has so emphatically embraced.  Our brand loyalty, dealership loyalty and customer loyalty is directly affected by a website that dealers are allowed to advertise under invoice! Every dealer would then have to sell their unique qualities instead of cannibalizing our profits. Shutting these third-party sources down is a viable option that neutralizes predators and offers the transparency our guests require.

In closing, my colleagues and I are adamant about NADA be on the forefront of change on this issue.  Make no mistake, this strikes a chord with the value of our brand loyalty. 

Comment by Stan Sher on November 29, 2011 at 2:11pm

Next time I speak in front of dealers I will make a mention.  I am not shy :)

Comment by Michael Paulson on November 29, 2011 at 2:07pm

@Jim  You said "

Comment by Michael Paulson just now           

Delete Comment

@Jim...You said: "

Comment by James A. Ziegler 56 minutes ago          

This is fantastic. AND, yes Joe, it will not stop here. I am currently consulting more than 90 corporations that own dealerships... some have one store some have 30 franchises... I write for two magazines and two high auto membership blogs... more than 100 dealer 20-groups,  I have been the keynote speaker for 79 state automobile dealer association annual conventions and have presented workshops at 11 NADA Conventions... with many speeches coming...  I don't mind vendors helping dealers get traffic BUT what we're seeing here is a war against auto dealers... Look for me to become increasingly vocal."

OK...You have your end covered.  You have a great platform to spread the word from.  Now on to the rest of us.  Can everyone commit to bringing up the topic in their next 20 group meeting?  Are their other practical day to day ideas to spread the word on this?  We need to keep the message in front of the dealers who are currently on the TrueCar program.  No dealers = No program!

Comment by Jim Kristoff on November 29, 2011 at 1:51pm

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Comment by Stan Sher on November 29, 2011 at 1:41pm

I do not want to offend the 6,000 dealers but it is a lack of questions that they ask and the lack of information that they look for.  You know why vendor reps fear me and cannot handle me?  I ask questions and put them on the spot.  Yes, the people that would come in to try to sell me a product and tell me how I am going to sell more cars using the product when they have never been on the sales floor themselves and do not know what it is like to work in a dealership (most vendor reps).  They cannot stand me. I ask questions and when they can't answer it or when they hear my opinion and ways they need to improve they think right off the bat that I am a genius and my mind works in brilliant ways.  They do have a valid point and they are right.  But the reality is I go to conferences, I interact with professionals in my industry, and I read magazines.  Yes I am educated in my craft.

 

Now going back to 6000 dealers being idiots or not.  Let's just say that 6000 dealers are not Stan "THE MAN" Sher and they do not ask the right questions.  Let's also remember that dealers and General Managers look at what a product costs them and not the big picture sometimes.  Dealers are sold instantly on the fact that they do not pay for the 200+ leads that they get and they only pay for the lead if the car gets sold.  Some dealers I know do not mind losing money on a unit because they know they average over $1,500 in gross on the back end (I worked for one like that).  They do not realize that a Zag.com lead comes in from 50 miles away and my BDC wastes time calling them and following up with them only to find out that we can't sell the car for any less and that they went to their local dealer and beat the price by $300.  Zag leads become a hit or miss.  I have seen BDC departments have a BDC coordinator whose sole responsibility is handling Zag (200 leads per month).  They made appointments and the store would average a nice 10% close ratio (20 units) but the grosses were too low.  The nice thing about this dealership was that they were in an interesting demographic where they can retain the service business.  But the fact of it is, we could have sold those customers the same cars and made more money on them as well as keep them happier.  It is always a nightmare dealing with the leads that Zag provides (especially if the vehicle has tons of options like Chrysler or Toyota).

 

TrueCar promises transparency but what they are really doing is making this industry more cut throat.  Competition is good and healthy because in order to win someone else needs to lose.  However, if we are going to have competition, can we at least be fair about it?  TrueCar gives a nice pitch to customers but it also gives customers more of a reason to hate car dealers.  It is not fair.

 

I mentioned before losing $400-500 if not more on a unit.  This happened once.  If this happened 20 times in a single month to a dealership it would really hurt.  20 times 500 is $10,000.  Lose $10,000 in a single month, have bad CSI, and unhappy sales people because they can't make a living.  Think about it.

 

Dealers need to understand that free leads are not free.  They come in free but they end up costing more overall then a third party lead source provider.  A third party lead source provider does not tap into your data and use it against you when you pay $20-25 lead and your chances of making a profit are way better.  My advise for dealers is to ask more questions.  I see dealers afraid of advertising DealerRater and their positive online reputation to build value in the sales process (because they are afraid they will generate bad reviews because of it) yet they are free to give TrueCar the key to their data so it is used to royally screw them.  Is that ironic or what?

Comment by Michael Deville on November 29, 2011 at 1:39pm

Cancer does not go away. The customer is not going to benefit, Even their dummy Dealers will refuse to do this, and offer cars with accessories etc.... and after all we will get a" BIG BLACK EYE" Does anyone know the background of the owner of THEFTCA;. was he a dealer owned or manager, some computer specialists?  Edmunds is a much better friend to the dealer and the consumer after all.  Edmunds looks like a hero to THEFTCAR. COMPLAIN TO YOUR MANUFACTURE COMPLIANCE, lets see if they have the same BALLS they use towards us.

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