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 Thomas A. Kelly on January 7, 2012 at 12:18am
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This is my comment to a post made by a dealer on ADM:
David’s points are very well put. Something he said really caught my attention,
"Zag reps weren’t calling me every month telling me to lower my prices so they could fundamentally change my business for the better. They wanted me to bottom out my pricing to trigger Zag sales because that’s the only way Zag generated revenue."
This is the second time I have heard a dealer say this in the last 24 hours, referring to their rep calling them and asking them to adjust their prices. I heard one dealer make a public comment "3-4 times a week we get a call, we need you to adjust your price" from the rep. At best this activity by Zag/TC should disprove their claim as not being brokers and at worst; it appears to be an attempt on their part to fix a price because the rep/Zag has pricing info from all participants in their program at hand. Since David was the second dealer in such a short period of time to make that claim, I am beginning to think there may be a pattern here and not just an event.
1. Can a rep call one or any participant in their program and advise them in any way as to how they should price?
2. Does the fact that they are seeing all the prices when they make that call have any relevance on the issue?
3. If they did/do make calls to dealers and ask them to change/adjust pricing, does that in and of itself make them a broker in most states?
Anyone have a qualified opinion?
Thanks, Tom
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Comment by Michael Paulson on January 7, 2012 at 12:13am
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Thanks Keith. Now I'm somewhat embarassed because my previous comment was a rhetorical question aimed at encouraging people to act. Investors don't necessarily spend their days investigating the companies they invest in. Most people need to be hit over the head to realize that things are headed South. It always helps to have people who have inside connections ringing the bell. This discussion has done a great job with those in the business, but what about outside?
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Comment by Keith Shetterly on January 6, 2012 at 9:45pm -
@ Michael Paulson: USAA is an investor in TrueCar. They know all about all this, don't worry about that. They came on board when it was Zag. Anyway, I wouldn't worry too much about Yahoo, AAA, etc. They know, too. This hasn't happened in a vacuum, don't worry. :)
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Comment by Thomas Mitchfield on January 6, 2012 at 9:10pm
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26,000 views on this BLOG. Thank you JIM for having our back as an Industry
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Comment by David T. Gould on January 6, 2012 at 8:56pm
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Interesting thought, TrueCar has $50 million / year to Yahoo alone plus tv and other advertising. How long do you think it will take for them to go under?
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Thanks Jim. I'm sure USAA would be pissed...If they knew. Does anyone have connections? Same goes for AAA and Yahoo!. I would guess that TrueCar is in breach of contract with USAA/AAA/Yahoo!/etc.. Beyond cancelling their paying customers, losing major groups of users would go a long way toward killing the IPO.
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Comment by Keith Shetterly on January 6, 2012 at 6:41pm
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@ Robbie: TrueCar inherited the Zag dealers, who were signed up for incremental sales from affiliates (USAA, etc.). It was NOT NOT NOT dealers signing up to get TrueCar.com leads.
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Comment by James A. Ziegler on January 6, 2012 at 6:36pm
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Comment by Stanley Esposito on January 6, 2012 at 6:35pm
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I wonder how Yahoo is feeling about all of this? If it is too good to be true it probably is. Great job by Jim Ziegler and all of the contributors to this thread.
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Sorry...partial false alarm. I received a call from California but it was NOT a state regulatory agency. Something about Mercedes guidance to their dealers similar to Honda. I am tracking the story down now. JIM
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