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 Mike theCarGuy Correra on November 27, 2011 at 8:02pm -
As always, the Alpha Dog sums it up nicely! :)
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Comment by Keith Shetterly on November 27, 2011 at 8:01pm
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TrueCar and Zag are doing with the dealers' cooperation what the dealers' have fought for years with state franchise laws: Making it about the car, availability, price, and financing. And not about the dealership. Dress Rack price and corporate program selling at its finest ensures corporate profits in the manner of Walmart. What do I think would put a halt to this? Updating as many of the state franchise laws to include the issue of revealed pricing by the OEMs, and then also just STOP using Zag and TrueCar. We'd all have to agree to that, however, and getting dealers to 1) understand and admit what has happened and 2) to agree what is needed to be done would have to overcome the "can't herd cats" issue. My $.02.
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Comment by James A. Ziegler on November 27, 2011 at 7:55pm
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Okay...SO...I think we've got it...talk your dealer into dropping ZAG and True Car and tell your sales manager to grow a pair... and go do business. Does that just about sum it up?
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Comment by Mike theCarGuy Correra on November 27, 2011 at 7:41pm
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Randolph I wholeheartedly agree that the salesmanship makes all the difference, and having a consistent process and training system in place is what its all about. That being said, the act of getting the customers attention, then providing them the reason to come into YOUR lot as opposed to the 12 bazillion lots between you and that customer are where ZAG, and other lead providers including organic leads from our own site, come into play. After the bloodshed of the last few years pricing wars, customer simply dont know what a good price is anymore and certainly dont know when to stop asking for more. TrueCar is out there, and not going away anytime soon so I have my team informed and up to date of their pricing because its important to be aware of whats out there although there are no rules saying we HAVE to match pricing seen elsewhere. I had to rethink my own values and finally reach the point of being ok with not getting those 5% that ask for even greater discounts than we send out. Chasing those deals only leads to bad CSI (no value perceived by the customer so they dont feel like they got a 'good deal') and no after sale visits to our Service Dept (more than likely price only shoppers end up at the local EZ Lube etc with coupons in hand). Instead we focus on the deals we can make, at our terms and do our best to build value and a customer base for future business. In addition, the stress level has really lessened since I have allowed myself to let go of the 'must get EVERY deal no matter the cost' mentality. As I said before our numbers have stayed consistent since dropping ZAG while gross has increased so I am fairly convinced it was only the fear of loss that kept me from dropping them sooner! :)
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Comment by Randolph S. Lofgren on November 27, 2011 at 7:24pm
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Sounds to me, everyone forgot about selling the value of their products, customer service after the sale, and most of all protecting the future of your dealer! I agree with you Michael, we don't need True Car/ZAG to lose profits! Everyone knows I'm a Fixed Ops guy, but I'm more of a bottom line business guy and for years Fixed Ops has had "aftermarket shops" to compete with. I know this is a different topic, but the success of Variables is the success Fixed Ops. My training processes to other Service Managers and Directors is to sell the value and benefits of of your manufacture warranties, loaner vehicles, trade-in values, goodwill, and more. Instead of getting desperate, train your employees to educate their customers and sell invoice, not True Car and ZAG!
Great post again Jim
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Lightly treading around Government Price-Fixing Laws, it could be done... BUT...where is the NADA on this? When are the dealers going to file a class-action lawsuit against the manufacturers for releasing our costs to Edmunds and every other swinging Richard that wants to know our information. No other industry does this.
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Comment by Joe Clementi on November 27, 2011 at 7:22pm
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Jim. I've never been accused of being a genius! But I'm absolutely in tune with you on this. We née to get rid of vendors that make dealers pay to price cars under costs! What message does it send when anyone can buy a new product under invoice by simply going online. Where does this madness stop? The manufactures should put a stop to this! It strikes a lt the core of our business model of making a fair profit in everything we sell
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Comment by Max K Webb on November 27, 2011 at 7:20pm
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I think the answer is simple, but every dealer nationwide would have to be onboard. We take back control of our business and our livelyhood. Why do we even consider selling a new car below sticker price - rebates. We are so cut throat in our industry that we have done all of this to ourselves. We need to band together as an industry and take control back. It only works if we are all on the same page.
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rest now Larry, take two of these and call me in the morning...
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Joe Clement.... you're a genius Clement ... (borrowed that from Forrest Gump) In all seriousness Joe, you're in tune with me on this. I can double the profits of most dealerships just by getting mental re-positioning of the sales management and Internet departments... and getting the dealers to throw the low-gross vendors OUT.
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