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 Joe Clementi on November 28, 2011 at 3:53pm
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@Michael- The problem with your theory is that the Truecar prices are real! Those dealers are really selling my customers that car for those prices! The issue isn't "laying out the information for an informed customer" as you suggest. It's that customer believing in the message that has been beat into them for years. Credibility is at the core of the issue here. We do all the things you reccommend and in fact, take it much further. We discredit the pricing issues but what you forget about is the reach of social media! Customers talk through social media and cars purchased at or below costs are discussed at lenght. What about that customer that never makes it into my dealership? The person who goes online and drives to that dealer without ever contacting us? The person(s) who live in our PMA and work in my marketplace. This lends credo to the business plan.
It's easy to critique a dealer for not overcoming this "objection". But the fact of the matter is what's at the core of this discussion. TC and other third-party vendors are dictating prices below costs and the dumb %#ss dealers are paying them for the privledge of selling below costs!
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Comment by Wendell Hardy on November 28, 2011 at 3:52pm -
@Mark..Thanks! It is interesting how the industry justifies stuff that shouldn't even be mentioned. If ANY of my stores would have tried to convince me of running crappy #'s, I woulda fell out of my chair! I KNOW BETTER(been there and sat every chair!) Point is, they knew better! I owned a stand alone Suzuki store in Leesburg, Florida. We ranked 14th in the country(632 total stores) selling 700 new yearly, and over 3800 used. When the "LEADER" sets the bar low, and allows excuses, the creative excuses come out!----There is one excuse that I haven't heard..."gross is a direct result of units sold." That is a bunch of bull also...One has NOTHING to do with the other...Okay, off my soap box, and back to making money!! Best to ALL...
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Comment by Keith Shetterly on November 28, 2011 at 3:46pm
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Considering the posts in this forum, I'd say that if TrueCar/Zag were a dealer do you think they had a reputation problem with many here? What would be their CSI to cause all this ruckus? Have they ignored the larger dealer body with published interviews about commission-less sales floors and standard pricing? And pricing that ignores the "lifts" that make a dealer accept a price? And, apparently, the fees needed to do business on a car for a dealer? What advice would we give if they feel they are being misrepresented?
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Comment by Larry Muirhead on November 28, 2011 at 3:42pm
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JIM... When I pull up a Camry LE in Truecar you find http://www.truecar.com/prices-new/toyota/camry-pricing/2012/
$21,632 is what Truecar shows. That car wouldn't even have the Carpet Mats, South East Toyota fees, or Destination.
When I pull an invoice excluding destination and Southeast Toyotas fee (5 state region) the invoice should reflect $20,589. Their TRUECAR "GREAT PRICE" is $21,073. So that's a $474.00 LOSER out of the gate. TRUECAR isn't taking into consideration that all Lexus and Toyota vehicles in the Southern 5 States have an Admin fee. For the Camry it's $675 SET FEE then add the Destination of $815. $22,147 WOULD BE INVOICE INCLUDING DESTINATION, SOUTHEAST TOYOTA ADMIN FEE, WHICH INCLUDES THE GAS CHARGE ON THE INVOICE = $22.83 AND SET DISTRIBUTOR PLUS FEE OF $46.75Total difference with no added options = <-$1074>
Now imagine that customers print up the Truecar price and want a car with Carpet mats and a power seat package.
"You can throw that in.. I know you people make pleanty of money!"
"Go get your manager" "I've got a cheaper price at the other 7 stores already:
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Comment by Michael Paulson on November 28, 2011 at 3:42pm
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So if we agree that the TrueCar pricing isn't, then we are left with the question of what to do when someone comes into the dealership with the printout in hand. I would think that muddying the water and instilling doubt about the validity of the information would be the best path. How do you handle a shopper that has been let out on a rocket somewhere else? First, show them the real invoice on the car they have chosen. I have found that if you lay all of the information out in front of an "informed" customer, it is too much for them to process. It also gives you credibility for being willing to give them the insider information. Now the tide is turning. Explain that all dealerships have the same cost. Romance them a little, and hold on the trade, and you may have a car deal.
What not to do...Don't blow them out! If they do leave, you want to make it ok to come back when they don't get the price they think they can get. Eventually they have to buy a car. It may take realligning their expectation levels a bit, but you want to be there when they become more realistic.
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Comment by Mark Elliott on November 28, 2011 at 3:41pm
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I really like your style Wendell
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Comment by Wendell Hardy on November 28, 2011 at 3:37pm
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The more I read this thread, the more I REALLY believe that some/most have been "drinking the koolaid"..Are we REALLY gonna justify investing 10's of thousands of dollars to make/lose a few hundred dollars? JUST SAY NO!! These 3rd party companies are NOT ON YOUR SIDE! There are also ways to advertise YOUR inventory, without paying these types of companies. HISTORY LESSON...AutoNation was going to "change" the car business in the '90's, by offering a one price no haggle deal..."We are going to show those dumb 'ole car guys how to do business!" That took about a year or so, then they rehired those "dumb 'ole car guys" to become a profitable company. People sell cars...AND IT'S OKAY TO SAY NO..IN A NICE PROFESSIONAL WAY!! Stop making excuses about why your pvr is as low as it is! SELL SOMEBODY SOMETHING!!
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@Larry...Since your dealership doesn't collect a dealer fee, you are really up a creek!
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@Larry: Where does the "Dealer Cost" of $21,184 fall compared to your NNN cost after all SET fees, etc.? It sounds like you are a lot further off than the Honda example.
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So we know that TrueCar has Honda wrong. How about a GM dealership that has a convoluted incentive structure. I can't imagine how TrueCar would know what to include and what to ignore.
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