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 Joe Clementi on November 29, 2011 at 12:03pm

@Chad.  Your response is in direct proportion to the lack of knowledge you have on this issue.  It's not a one off program that "needs to be upsold".  Nor are any of us calling the nearly 6,000 dealers stupid.  We believe the "upfront pricing" that you refer to be inconsistent with our business model.  The pricing is in most cases below cost and as simple minded as you make it sound...yes, a deal can be made into a deal with a great trade-in, back-end products and the other ancillary products!  NO ONE is debating that issue.

We all understand the value of selling one product at a time and making the most of that opportunity.  What the debate is in how the pricing is published.  Posting prices, costs and retail online is not a substantial issue.  However, the pricing of any product for any customer to find with ease AT below invoice is not needed or consistent with any business model.  What's your suggestion to those deals that are lost in your specific market place to customers that have never visited the dealership?  How are we to combat deals without a trade-in, cash deal with absolutely no back-end products?  I get it...take the deal right?  What's one loser?  The issue is, where do you draw the line?  Does it continue to erode the profit margins?

It's easy to be critical of a dealer speaking out about something that affects the credibility of his/her business.  What's difficult is speaking out against something you BELIEVE in!  So feel free to bash the dealers' speaking out on this issue but before you do read the context of the message.

Comment by Keith Shetterly on November 29, 2011 at 11:58am

Chad, I disagree that 6,000 dealers can't be idiots, though I wouldn't use that strong term here.  Say it's 10 deals a month, it's a small wave on the beach against your feet,  Across the whole "beach" of dealers, it's a HUGE wave.  That's the math that's actually interesting.  And the whitepapers . . . well, they tell the agenda.  I wonder if the dealers using Zag either didn't read those or thought that it was just their feet on the beach, so who cares?  One of the things dealers are prominently bad about is thinking of the market as a whole instead of their tiny piece.  My $.02.

Comment by Stan Sher on November 29, 2011 at 11:53am

A few years ago I was working a deal at a Honda store.  It was around the time the time TrueCar was starting to show some visibility online.  I was in a store that brought in a certain breed of customers known for "grinding" sales people (not going to be racist or politically incorrect and I am sure that gives you guys a good picture).  If you are in the Edison or Princeton part of NJ you know what I mean.  Well we were working this deal for a good 25 minutes.  I remember the customer giving in a TrueCar print out on the same exact car for the same zip code. Well the best price posted on there was $1,300 under invoice.  We had $500 in Dealer Cash and another $600 in holdback.  So this price was a $200 loser.  I had done everything that I can do to not make that deal and throw the customer out.  At what point do we stop?  Well my point at stopping and ignoring a deal is when I lose $200 on a unit and have to shell out a commission and everything else on top of it.  I was not taking the deal and I was firm on that.  Low and behold, our giveaway artist GSM (always a weakling) decides to take the deal.  I was not a happy camper.  I followed his command and we made the deal.  The customer was happy.  We spotted the car.  We paid out a $100 flat and a $100 spot bonus (the store paid $100 bonus on spots).  We lost $400 on the unit.  This was my introduction to TrueCar and Zag.  From that moment, I made it a personal mission to try to destroy them.  Did I mention that this deal hurt our CSI?  Low gross = Poor CSI as we know by now.

Comment by Chad Collier on November 29, 2011 at 11:46am

First of all I believe there is definitely a better way to achieve what the consumer wants and what the dealer wants and I know it is coming soon.

However, 6,000 dealers can't be idiots guys. The program must be working for some dealers. I don't believe that it was just a lack of oversight by 6,000 dealers. This may be an example of some dealers outworking the others and finding a way to make it work like we do with any other program like stairsteps, employee pricing, cash for clunkers, etc. Some will figure out the program rules and details and find a way to succeed with it and some will complain that they are at a major disadvantage and it's not fair. Don't let GPVR be an excuse for being a sorry closer. I can't stand to hear a manager say those people were just ridiculous an didn't want to pay anything and will never be happy. Most of the time this manager listened to the salesman tell him that these people were tire kickers or jacks and went along with it and let the customer go without a TO. I know everyone of you on here run the highest grosses and  are King Kong closers but some of you need a dose of reality and look in the mirror when pointing the finger. A strong desk manager can run a high GPVR and get all he can on every deal small and big, not just pass on the small and take the big ones. That is weak. Find a way to make money on a nothing deal. Fundamentally there are parts of the program as a Dealer I would choose to be different. I don't agree with the upfront price on the web and making the dealer compete in that regard. I don't believe in the data built car and pricing that is confusing to the consumer and creates to many bait and switch opportunities. I do believe that every dealer has a choice to participate, The prices that are given are prices that the Dealer input. If a dealer does not want a 200 net loser than don't price the car at a $200 net loser. That is not rocket scientist. I would assume that the guys that are just figuring out that a TrueCar deal is a net loser never trained the staff on how to handle a Truecar customer, how to upsell, and control the sale and now they are disappointed that the deals did not work pout they way they thought they would. Must be TrueCar and the salesman's fault, right?   Maybe it was the customers fault who wanted to get a good deal, what an idiot huh? Remember a blind squirrel can sale a laydown, but a salesman accepts the challenge on the hard deals and sells his way into a profit and  a deal!

 

Another thought. If you do sell a new car at a couple hundred dollar net profit and take in a nice trade that you sold a week later for a $3,000 profit. Should you of passed on that deal?

Comment by Joe Clementi on November 29, 2011 at 11:12am

@Devin.   We are appreciative that you at least showed your voice here.  The problem is the propaganda that you speak has no merit!  Zero.  I would love to know how you arrive at the "pricing model" as well?  How accurate can the pricing be when in my specific situation the Civic is being sold near retail and your four TC dealers are all selling that vehicle below invoice!  Not by a little either...but by nearly $500!!  How can that be helping dealers substantially improve profitability?  Huh? Something smells like a rat here?

@Michael-  You nailed it!  The message cannot stop here.  We need to get NADA on board with this and put pressure on those dealers enabling these programs to stop NOW. 

Your turn now Devin_______ the floor is open...

Comment by James Carroll on November 29, 2011 at 10:58am
@James Love the Groucho quote. No truer message to proclaim.
Comment by James Carroll on November 29, 2011 at 10:54am
"IF dealers pay a smaller fee to TrueCar than their normal advertising/marketing expense per vehicle retailed, it is offset by the lower gross profit." 
The other problem with that logic is Dealers are not going to abandon all other marketing strategies, at least not if they have half a brain. This is just another marketing expense, and an expensive one at that. There is just no way to shine a positive light on a vendor that does not have it's paying customers best interest at heart.
Comment by Michael Paulson on November 29, 2011 at 9:31am

@Jim...Hey Jim.  You said: "

by James A. Ziegler 1 hour ago           

One of my dealers just ran an audit at my request of TrueCar Deals they did and told me most of them were coming in at $150 to $200 over triple net. Apparently difficult to pay for the sales person and the TrueCar fee. "

The question of the day is what will this dealer do now that he has figured out that he is losing money on these deals?  Will he cut the offending ad source?  I'm curious about the philosophy of this dealer and others.

You seem to have started a real beehive here.  Does it die with everyone going away pissed off and saying "I Knew it!", or is this the start of a grass roots campaign against TrueCar?  I can see how this company would grow with buying groups.  I have to admit that I have used it myself, but it only has viability if dealers play ball. 

Fortunately for TrueCar, we are a very fragmented group.  So how do we spread the word beyond this discussion?  20 groups, Digital Dealer, NADA?  By forcing a discussion, TrueCar will either have to change its model, or go away.

Of course that is just my opinion, and I could be wrong........

 

Comment by Michael Paulson on November 29, 2011 at 9:01am

@Devin...Hey Devin. Thanks for having the guts to appear here. 

You say "TrueCar has reviewed its pricing data with numerous dealer groups who have all verified the accuracy of TrueCar pricing data." 

This discussion has shown more examples of your pricing being substantially off ($800-$1000+) than accurate.  What is your process for TrueCar trying to verify that the information displayed is accurate on a continual basis.  I would think that this unfair representation of the actual dealer cost is a significant cause (not sole cause) of the resentment that you receive from dealers.  Please shelve the propaganda BS, as even your own publications seem to conflict.  Thanks again for participating.
 

Comment by Jim Kristoff on November 29, 2011 at 8:05am

But Jim......Devin says TrueCar IMPROVES dealer margins.......

 

Comment by James A. Ziegler 7 minutes ago

One of my dealers just ran an audit at my request of TrueCar Deals they did and told me most of them were coming in at $150 to $200 over triple net. Apparently difficult to pay for the sales person and the TrueCar fee.  

 

TrueCar philosophy...In the words of the late Groucho Marx  "if we don't sell too many of these we might break even."

 

Comment by Devin LaCrosse 9 hours ago

 

TrueCar Helps Dealers Improve Margins:   In most states, TrueCar operates a performance-based billing model, making TrueCar 100% aligned with dealers.   Dealers earn their business every day, and so should their marketing programs.  TrueCar’s dealer fees are well below the average advertising expense per new vehicle retailed per NADA.  TrueCar also helps lower dealership selling costs by providing high-quality customers and no need for haggling.   Finally, TrueCar provides faster inventory turns, helping TrueCar Dealers lower inventory costs.   Put it all together, and the cost savings that TrueCar provides to dealers help them keep their prices low, driving even more volume.    Many TrueCar Dealers have stated that TrueCar is their most effective marketing program.

 

I am confused..........

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