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 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

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Comment by Keith Shetterly on January 2, 2012 at 10:15am

@ Larry:  Yes, you are correct, in that the dealers carry the burden of protecting the data, using legal advertising, and operating in a myriad of dealer and consumer-protection laws in their various states--and, in some cases concerning the data, perhaps even nationally (looking at some of the text on the TC website, for example).  What's been amazing to me in all this is the reaction of TC to dealers trying to protect their business, both from market share and from a legal standpoint.  I don't think anything has been this mis-handled since Nixon--I think this whole issue gets to the core issue for TC of serving two masters:  The Consumer and The Dealer.  Very hard to do both.

Comment by Larry Bruce on January 2, 2012 at 10:04am

@Keith, Interesting for us for the dealer not so much. I am afraid the way we will find this out is either with FTC fines or with...God forbid a class action suit against the dealers involved. Ultimately the burden to protect the data falls on them. 

Comment by Keith Shetterly on January 2, 2012 at 9:56am

@ Larry, that question of Dealers as a "financial institution" came up during the Red Flag legislation; at least in those cases, some of the issues were mitigated.  It would be very interesting to see what the governing law is, as you say, in this case.  Nice to see you back on the thread, and Happy New Year!!  

Comment by Al Mosher on January 2, 2012 at 9:55am

Larry,

No argument about it - USA PATRIOT, GLBA, FACTA and a host of other federal legislation since 9/11 clearly include auto dealers in their definition of 'financial institutions'. I'm actually surprised none of the consumer rights groups have jumped into this one. It would be rare to see them and car dealers on the same side of an issue but this is not a normal threat - it affects consumers and dealers alike.

Comment by Larry Bruce on January 2, 2012 at 9:31am

@David 

David the Shelby amendment allows for the use of non-PII (Personally Identifiable Information) and I am sure that is what they are relying on. However the question is Shelby the governing law? One could make the argument that a dealership is a financial institution. In that case the governing law would be Gramm Leach Bliley which can make this very messy as there is a lot of contraindication in this and other laws regarding privacy. 

Comment by David T. Gould on January 2, 2012 at 9:28am

Does anyone else see the missing piece in the automotive news article? I don't understand how the privacy (data extraction) issue is able to get brushed off (again). If you want to "kill the beast"... STOP FEEDING IT! No one has the right to just take private information and distribute it at their whim. My opinion: TrueCar will be able to get around the broker and birddog issues. Tweek here, tweek there and they will continue the race to the bottom. Bringing the privacy and data security issues to the forefront will wake up consumers to the downside of feeding this beast from their side. The data issue is bigger than TrueCar and will kill multiple birds with one stone. 

Comment by Mike Warwick on January 2, 2012 at 9:20am

Great point about the Internet Director Jerry.  Most Internet Director's would love Truecar because they are generally paid on the unit, not the gross.  They would brag to ownership about what a great job they did until someone runs the numbers and realizes that they have lost thousands using Truecar as a source.

Comment by Mike Warwick on January 2, 2012 at 9:16am

Over 600 dealers lost in a little over a month!  Great job Mr. Ziegler.  A 10% drop in revenue will get any investor's attention.

Comment by Larry Bruce on January 2, 2012 at 9:03am

Thomas... OUCH! 

Make me wonder though can TureCar right itself with the dealer body and states with Painter at the helm? Would anyone believe?

Comment by Keith Shetterly on January 2, 2012 at 8:57am

@ Thomas:  LOL!!!  

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