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 6:59pm -
Larry, its not as gray as it not being ZAG's fault or not. Yes dealers drive to market down when they list ultra low prices however, when those of us that do have integrity try to hold a line and not price to the extreme we actually get a phone call or a strongly worded email that reminds you about your 'agreement' to be within market on your pricing or risk probation and possibly even termination from the ZAG program so in a sense your hand is forced if you want to continue receiving ZAG leads. The part that really sucks is the companies they have sucked in to join their program are pretty big and represent some real numbers in lead volume. Although our close rates were stellar with ZAG and we did a very respectable job maintaining back end numbers we finally came to a point that continuing with ZAG was not the path for us, we have canceled our ZAG agreement, brought on two 'traditional' 3rd party lead sources and haven't seen a drop in volume but front end gross has ticked up a bit! Some times the fear of loss is greater than the actual loss that results from the decision once its made...
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Comment by James A. Ziegler on November 27, 2011 at 6:57pm
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Larry that's because 95% of your customers are being generated by BAD Marketing. Have your Dealer call me.
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Comment by Larry Muirhead on November 27, 2011 at 6:53pm
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If you were our Sales Manager you'd throw 95% of the customers. As soon as they are under invoice, invite them to have a nice day and say GoodBye? We hear it all. I stay on the front lines of a busy Toyota Store. I'm in the Trenches with my sales team. I know what we're up against. It's a war... it ain't pretty.
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We're going to sell 13 million units or thereabouts with or without these alleged seeming to be parasites draining our profits while stealing our justified grosses ... The problem is... THAT WE allow these people into our data which they use against us. WTF? Why do dealers NOT just throw these people to the street and make a reasonable profit on deals that come naturally? Throw them out of your system and sell without them. Of course that's my opinion based on common human decency, I might be wrong.
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Comment by David Ruggles on November 27, 2011 at 6:45pm
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Just for record, I wouldn't give you two hoots in hell about the results of focus groups. In the early days of the auto business a focus group would have indicated a desire to have a faster horse that ate less.
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YES James.. we're sick to know that the customers know they can work the system and truly get a deal that the store wouldn't even offer their own family and not even know enough to appreciate it. I bet that's the case. Would Steve walk into his Sales Managers office and tell him he's going to sell his brother a car as long was they discount it $2700 below invoice? Doubt it, they'd tell him to go home.
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Comment by David Ruggles on November 27, 2011 at 6:40pm
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We old timers recall when the buyer would go to the credit union to get our cost figures, that is if they didn't just go to the newsstand to buy a book with the information inside. In those days, price changes happened quite often and the pricing information customers used was always out of date.
As time went on, the markup decreased, hold back increased, and more and more of the dealer's profit became "trunk money." MSRP was raised to provide room for the additional rebates, subventions, buy downs, and other incentives. Dealer profit became more a product of factory money received than money made over invoice. Of course, this has made sales people subject to the whims of dealers, who are often reluctant to disclose to sales people what they are actually making on a deal. I don't regard any of this as good for our industry.
Now they have figured out a way to arm the consumer against all dealer profit making attempts, while enlisting those same dealers in their efforts.
Our industry seems to be caught up in our own hypocrisy. We say the relationship is the most important thing. We say we believe in owner loyalty. We say closing percentage is important. The fact is, the best closing percentages come when customers are buying from the same sales person again and again. Yet, the industry consistently mistreats the same people we say are the most important link in the chain. After a while we need to look in the mirror and admit why we have such incredible turnover. Blaming it on the people we hire just doesn't make sense and is indicative of denial.
As the same time, the factory pressures dealers to spend more and more on their facilities, raising cost structures? Those same factories freely provide information that ends up in the hands of consumers in their negotiating efforts against the dealer and our sales person in the gross profit effort. And now dealers are providing actual transaction information to consumers.
Is all of this fu*ked up or is it just me?
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I am hearing all of this and it makes me sick... especially Steve deep-discounting Lexus premium merchandise.
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Michael Correra.. I'm with you. Makes me sick to see the spinless, mindless pricing from our market area.
It's not ZAG's fault. It's the "Desperate mentality" that is at fault. No other organization is faced with downward spiraling profits and increased credibility issues as ours has. I love it when people ask us to discount a Scion. We tell them the franchise was set up that way from the focus groups requests to take the Negotiations OUT... I love to see the look on their faces when they ask for a $2000 discount on a tC and don't get it. The point is, THEY STILL BY THE tC without a discount! The value is there if they won't discount it!
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Yes Steve... the dealers in our area are aggressive. If I kept our price on a Camry for instance at $500 over invoice, I'd be the laughing stock of the County. RED on ZAG would also mean the customer will feel that we are profit mongers charging "OVER" invoice. HOW DARE US! We should be ashamed and reported to the Invoice Keepers Society of the Universe.
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