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 28, 2011 at 4:10pm

@Keith -  WOW!  If this whitepaper doesn't say everything we need to know about the direction of these so called consumer advocates sites, I don't know what will?  Net MARGIN compression, commoditization of the car???

What dealer in his/her right mind reading this article would pay hundreds per lead for these services?  Too bad the guilty parties won't read any of this anyways! 

Thanks for the share Keith!

Comment by Keith Shetterly on November 28, 2011 at 4:08pm

Oh, for the Lurking TrueCar Employee, there's also this gem from the Zag whitepaper 'Long Live New Car Profitability' (bolds mine, again) at http://www.zag.com/websiteASSETS/whitepapers/ZAG-WhitePaper2.pdf
"Upfront pricing is the new automotive retailing paradigm. It’s the tonic – the profound change – that simultaneously increases volume and decreases per-car sales expense. Without upfront pricing, dealers are far less likely to be found by consumers seeking an informational advantage online — thereby risking irrelevance and, ultimately, extinction. With informed, competitive upfront pricing, however, dealers are not only able to potentially boost volume, they are able to change their cost structure and preserve their net margins by operating with greater efficiency. At this critical juncture in the industry’s evolution, dealers who embrace the next wave of change will be this era’s winners. Reorganizing the automotive retail business around this guiding principle has become mandatory."

Comment by Larry Muirhead on November 28, 2011 at 4:07pm

Someone told me "It's all about training".  Can the people who believe it's about training please go train the buyers not to grind their sales associates and managers for 4 hours to save $2.62 per month on a 36mth lease?? 

Comment by Michael Deville on November 28, 2011 at 4:05pm

Additional thought, what are they doing in your DMS anyway. Say good bye, $300 and lose a customer for life. SMART.

Comment by Keith Shetterly on November 28, 2011 at 4:04pm

Here's a quote I'd like to see defended by the Lurking TrueCar Employee, straight from http://www.zag.com/websiteASSETS/whitepapers/ZAG-WhitePaper3.pdf (bold by yours truly) "Upfront pricing is the new world order. Its arrival heralds a bona fide tipping point in automotive retailing. Upfront pricing is non-negotiable in an environment defined by net margin compression, anonymous access to robust product information for consumers via the Internet, and the commoditization of the car. To facilitate a purchasing decision, the online commodity shopper wants an informational advantage, and that is truly achieved only when the buyer can get access to an upfront price—anonymously—and has the tools to compare that price with the market average, to know it’s fair."

Comment by Michael Deville on November 28, 2011 at 4:01pm

Jim, I did not see the Theftcar fee. I have many customers that say the dealer did not even have the car. No car no price. Lets get real; advertise and you'll get customers and not the type that theftcar may offer. No to low ball prices, yes to getting your own customer and grow your own business.  $300 per car is still advertising, if you drop $1000 on a car that is selling anyway plus $300, does that make sense to anyone. They teach you that 1 + 1 =2 not 1+1=-2. I HAVE NEVER SEEN A FROG JUMP BACKWARDS.

Comment by James Carroll on November 28, 2011 at 4:01pm

@Larry let's not forget SET Distributor Plus $46.75, gas $23,74  on top of the $675 SET ADMIN FEE AND the Destination fee of $815  - and that is just the car - and as Mark pointed out you have floor plan,back office comp,sales comp, electric, maint, etc.  At this rate we are paying ZAG 2x what we are paying the salesmen for a flat.

Comment by Jason Sellers on November 28, 2011 at 3:58pm
Jim,
I haven't read all of the 186 comments on this blog "nice topic by the way"; but I think you hit the nail on the head with the "True Cars" product.   I've done my research on True Cars or "lose money cars.com" and found out that it's the dealer's in the participating area that set's the price point for these deals.  For example, in my area we built a 2012 Cruze LS and their invoice price and my invoice price was exact.  Their price was $500 below invoice which now puts you at a lower price that what a GM Employee can by the car for.(that opens up a whole new can of worms). After all of that B.S. you still have to pay True Cars $299 for the sale of the lead.  I'm going to say this about True Cars "I'm ALL SET!" I challenge all dealers to stick to their guns and hold whatever little gross we still make on these new vehicle's.  Are we so desperate to hit these different manufacture volume incentives that we've turned ourselves into 3 A.M hookers!(no offense to any hookers that might be reading this right now!)  I mean, "come-on man!"  If your a dealer who needs to wholesale their new car inventory just to hit some bogus manufactures volume program just to make money, you need to pack it up and sell right now.  I hope your back-end deals are outrageous and your service is killing it because your won't have a sales team to sell your vehicles.  We(dealers, salespeople) provide more that just a vehicle.  We provide professionalism, consulting, service after the sale, and a sales experience that is second to none as well as providing a world class automobile.  Oh yeah, the dealer who participates with True Cars will not hit their volume bonus program because these customers WILL KILL YOU ON CSI! We need to get back what we lost and realize that we only make a 3%-5% profit on the front end with employee deals and that's the LEAST amount of money we should make on these deals.  Like you said, let's "man up and get back to what we do best, selling!
Jason Sellers
Comment by Larry Muirhead on November 28, 2011 at 3:58pm

Isn't it just amazing how we wouldn't have a chance of a snowball in hell to tell a customer that they owe us $299 because the service from zag isn't free. Sad how we pay ZAG more (2 times more) than our own sales associates taking 3 to 5 hours of their time to insure all the steps of the sale are compete, not to mention all the follow up involved in customer service and retention.

Comment by James A. Ziegler on November 28, 2011 at 3:55pm

I want to see a lot of examples like those here of specific models that TrueCar builds at a TrueLoss.... Okay guys and gals, get those figures assembled. OH AND BE SURE to include the $399 or whatever it is they charge the dealer as part of the net cost.

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