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 James A. Ziegler on November 28, 2011 at 2:40pm

Well Michael, they are also now telling dealers what others are getting for trades along with the low ball quotes...

Comment by Michael Paulson on November 28, 2011 at 2:38pm

@ James A. Ziegler:  You can also hold on the trade.  Think about how you would handle a customer that came in off of an aggressive newspaper ad.  This is the same thing, with the exception of the fact that you have time to strategize.  As with every appointment where price has been discussed (shouldn't be any higher than 15% or so of the leads) you want to find a switch car, but you have to be willing to sell the car as advertised, if the customer insists.  With ZAG, you set your prices in advance for every model.  I wouldn't advocate setting them so low that you lose money.  You do have the advantage of seeing where current pricing is in your marketplace.  If you don't like the gross on a specific model, then pass on that car.  I would typically do this on low availability models where you know you will get MSRP.  All I'm saying is set it up in a way that you can live with.  You only pay if you sell a car.  No harm, no foul.

Comment by Larry Muirhead on November 28, 2011 at 2:37pm

It's just sad to see the market exposed the way ZAG/Truecar does! The info is exposed before one even has to submit a lead!!  That data is being offered out for free... just go to truecar.com and you'll see.  As for the fact that they don't SET the price, that's true... the dealers do that. The final price that's emailed out to people is a different issue set up only on the Dealerships end.

 

Comment by Keith Shetterly on November 28, 2011 at 2:36pm

I can bet who that was.  Anyway, tell'im to come on.

Comment by James A. Ziegler on November 28, 2011 at 2:34pm

 

I just received a private message from an officer of TrueCar and they feel I am being unfair AND they told me their quotes are NOT financial losers. AM I misleading or unfair here? I don't want to be misrepresenting. I invited him to post here. 

Comment by James A. Ziegler on November 28, 2011 at 2:32pm

So Michael you're saying  The only way to make a profit with these low-ball leads to to switch the customers to something else and start over again in the negotiation?

Comment by Michael Paulson on November 28, 2011 at 2:27pm

Hey Chad:  While ZAG customers may be a little more focused than most Internet leads, we still know that 80% of Internet shoppers buy something other than what they originally requested information on.  ZAG customers will be an appointment.  This means that you have the opportunity to look, in advance, for demos, loaners, factory cars, and even used alternatives.  Since the customers are naturally disposed to be interested in this type of "deal" you should have pretty good success with it.  You have to be willing to sell the car as you have quoted if they don't go for it.  The key is to prepare, but we should be doing this anyway.

Comment by Pat Hayes on November 28, 2011 at 2:26pm

@Wendell my point exactly last night ..... stop buying garbage from those 3rd party deals and focus on YOUR customers. If you need more of them.... GO GET EM. Those 3rd party companies get them and their only offer is "lowest price guaranteed", etc. I made a comparison last night between the PC industry who continually plays the "true car" game and Apple who refuses to play the true car game and simply focus' on quality, etc. Now who's the most valuable company in America.

I think my comparison and statement of simplicity in solving this was attempting to drive away the concern of what really is going on. In all reality, it's the lack of the focus on quality and the constant method for searching for shortcuts that has led to this. When I first got in the car business a very smart GM I worked for said that taking shortcuts would only cost me money. He was right then and he's right now.

 

As dealers you have a say in this.....the craziest part is we're actually financing this whole fiasco.

Comment by Chad Collier on November 28, 2011 at 2:22pm

@Micheal are you saying they come in with a ZAG price and then you switch to another car and raise the price from what your ZAG price is? What do you mean by "You wont get away with this on all of them"?

Comment by Tom Drommond on November 28, 2011 at 2:21pm

@Mark - I don't know that 3rd party companies are bad.  They have gained access to a segment of the market that we, as dealers, are not engaging.  They have marketed themselves effectively as being against us and on the customer's side and it has worked. How else would you gain access to these customer? Build out a competing business model and go after their customers? Spend the money they have on branding, building affinity programs and marketing to dealers?  Now try to do that for Dealix, AutoTrader and Edmunds.  Not happening.

I want every customer contact opportunity I can get or find. I don't care where they come from as long as they come here.  If I never talk to them, I never sell them. 

The only real issue I see here is DMS access and that's a real problem.

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