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 Michael Paulson on November 28, 2011 at 2:16pm
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Has everyone really looked at how these lead sources work? Don't forget that you do get to set your price ahead of time. I wouldn't set them to be a loser, but don't forget that if one of your competitors does, then they will likely get the lion's share of the leads. My experience with ZAG is pretty good. The key is that you want to make a strong attempt to switch them to a different car or hold on the trade. You won't get away with this on all of them, but you should be able to on enough that the gross should be doable. You only pay for the leads that you sell, so if it isn't working for you, it isn't costing you either. ZAG will eventually shut you off if you can't close any deals. In a time when showroom traffic has been extremely light, this has been a way to get some ready/willing/able buyers into the showroom. As the economy improves, the nead may decrease. Regardless, blame your competition if they are quoting stupid deals. If that is the case, they are probably screwing up all of the advertising sources as well. At that point, ZAG/True Car is the least of your worries.
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Comment by Mark Elliott on November 28, 2011 at 2:15pm
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@Wendell
1st off...Let me start by saying,you couldn't be more spot on.
2nd...My Dad always told me,"It should be called uncommon sense,because,if it was common,more people would have it"
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Comment by Jim Kristoff on November 28, 2011 at 2:12pm -
@Wendell Hardy....
I like your 2 cents!!!
Good comment!!
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Comment by Wendell Hardy on November 28, 2011 at 2:05pm
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I tend to think that the "net line" has a lot more to do with running a business, than selling more "whatever" than the guy across the street. In '99 I went from working for a dealer that could care less about taking a loser deal. If I "booked" a loser, I was called on the carpet for it! His thought was "I'm in business to sell cars for a profit, not to sell cars for the factory!" We didn't have to take a loss to sell cars, and we still ranked in the top 5 with Chevrolet, Nationally.(Bill Heard Chevy, Orlando)...Several years later, I took a position as GSM running a Toyota store(Orlando market)..This dealership had been losing money hand over fist, trying to be #1 in ANY area. I met with the S.E.T. guys about some of the changes that we would make to be profitable. Long story short, they didn't like my approach of PASSING on deals that lost money. I got the speach about allocation, service retention, and loyalty from the folks that bought from us. HERE'S MY THOUGHTS....I don't want those customers!! Period!! There is NO loyalty from a person that will drive across town to save $100.00(literally)..I also don't want to "overstock" to accomadate this type of buyer. I also tracked our service business on sold units(new) and found that the person that wanted me to lose money, still came to US for service! MY POINT is..When you factor in floorplan cost, you aren't losing $100-500 to sell a car, it's much more. Stock what you sell, manage your assets(inventory) and focus on building value. Anything short of that is NUTS!! I don't do business with ANY VENDOR, that promotes themself before me. If the vendor isn't driving traffic to my site, but wants to sell me leads, PASS!!! At the end of the day, You can be #1 in EVERY area of sales, and LOSE YOUR ASS!! It took 4 months for that Toyota store to start PRINTING money!!! We ranked 4th in our territory(new), but 1st in certified pre-owned. From losing 150k monthly, to netting 350k...Was it me? NOPE!! Just common sense!!! That's just my 2c...
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@Todd,
WELL SAID!
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@Tom...I think you may have missed my point. I'm anti TrueCar,Trade in market place,or any other company, dipping their hands in the pockets of dealer's who have been "SOLD" on the fact,that they can't survive without these 3rd party company's!!! That's another reason this website is so great for dealers in the 21st century. We can all learn from eachother,as far as best practices on gaining market share,to fix op's,to the best ways to train,and retain, a strong sales crew! We just need to find away to get more dealers involed,and I bet we can save a great number of them.
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Comment by Todd Des Marais on November 28, 2011 at 1:48pm
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Show a dealership a way to generate traffic with little or no effort on their part
and they are all in!!!! Focus on the
little or no effort! Dealerships want instant gratification with automated programs. They are not interested in doing the work it requires to dominate!!!! They are too busy competing to realize they have completely devalued their product. Focus on staff development , without a well trained motivated staff you cannot survive at any price point!!!
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Comment by James A. Ziegler on November 28, 2011 at 1:42pm
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Now we're talking Tom, TrueCar/ZAG is a movement to put car dealers out of business... I believe that... Edmunds is also an anti-dealer threat... BUT, don't think they're winning, not yet anyway.
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Comment by Michael Deville on November 28, 2011 at 1:41pm
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I've worked at the same dealer for 20 years and have seen many fly by night MGR'S/Owners, I'm going to be #1 is the rant, they have zag, and other companies and never get to the top 100, the winner will be the company that can merge the old with the new........ and not give away their customers.
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Comment by Tom Drommond on November 28, 2011 at 1:39pm
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@Mark - Since there are 200 million register drivers in the US, and 13 million bought a new car last year, 300,000 is only 2% of the market. In addition to the billion dollars TrueCar claims, how much money did dealers discount the cars they sold? My guess is that we did more to effect gross profit than TrueCar ever can. I'd also bet that the number of TrueCar deals each of us are making mirrors that 2%. So what about the other 98% of the deals. Did TrueCar screw those up, too? Or, did we leave a few billion more on the table our ownselves?
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