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 referencehttp://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 Heather Graham on January 11, 2012 at 3:08pm

Thanks for comments Keith & Jim!
Keith - the possible exposure is amazing.

Jim - waiting on edge of seat again! Thanks for posting all the breaking news regarding this!

Comment by Keith Shetterly on January 11, 2012 at 2:58pm

@ Heather:  The dealers who have done business with Zag and/or Truecar in these states, especially but not limited to VA, are exposed to litigation for the sales that HAVE happened ALREADY.  The agreements in question appear to clearly pass liability to the dealers for all that.  Fines as well as litigation are possible for the past, no matter if any new model was ruled to pass muster legally.

Really, who wants to do business with a company, or its associated "tentacles" as has been said, when they failed the basics of getting $200million together and marrying it to a model without checking with the state laws?  It's not like these laws were just written . . .

Comment by James A. Ziegler on January 11, 2012 at 2:42pm

I have some exciting news Heather concerning the investors and the potential investors BUT I need to keep a lid on it for the time being. Will expand on it soon, you'll like it. JIM

Comment by Arnold Tijerina on January 11, 2012 at 2:41pm

Pete, even if they CHANGE to a subscription model as they just sent a press release to that fact in regards to Virginia [LINK], that doesn't change the fact that up until this point, according to the state, they were operating as a broker, in which case, any fees paid to TrueCar prior to this billing model change would be subject to the same tax reporting as any other broker. If, in your state, that means you send out a 1099 (as it should), then that would apply to TrueCar as well. I agree with you.

Comment by Heather Graham on January 11, 2012 at 2:39pm

Eric - I too have been wondering if dealers could recoup expenses.  Based on how Zag represented themselves and their services and based on how they represented the data they would pull.  In addition, perhaps on the basis of whether Zag put the dealers at risk for litigation - from the manufacturer, dealer associations, states.

 

Any recent scoop on Yahoo or the 'investors'?

Comment by Pete Obuchon on January 11, 2012 at 2:36pm

Jim and Arnold- I think that dealers are legally required to send Truecar a 1099 for comissions paid. As brokers, the fee is now considered a comission on a sale... I'm not a lawyer but that's just my take on it.

Comment by Thomas A. Kelly on January 11, 2012 at 2:15pm

The quality of the players at TrueCar & Company is really disgusting to me. When they should be the sharpest and most vigilant going forward, they in fact stoop to a new low. They are THAT vulgar, they just can't help themselves. When it is over they and others look back, it will be remembered that they were their own worst enemy....not the dealer.

Comment by Arnold Tijerina on January 11, 2012 at 1:45pm

Jim, the fees weren't "extorted". Dealers agreed to them when they signed up. That being said, they may have been illegal, in which case a dealer may have cause to seek reimbursement. I'd still send them 1099's at the very least.

Comment by James A. Ziegler on January 11, 2012 at 1:44pm

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Comment by Mike Myers on January 11, 2012 at 1:42pm

Eric, thank you for your comment about where this blog shows up in the searches. Great point; I just updated some of the search terms, so hopefully it will have a small impact in the coming days. Also, PAA put a little something out to their dealers about TrueCar and the whole broker thing going on the other day... just sayin'

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