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 Stanley Esposito on December 22, 2011 at 10:37am
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Thanks to all of you guys. Your hard work is paying off. I am proud to be associated with everyone of you!
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Comment by Larry Muirhead on December 22, 2011 at 10:14am
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Royal Palm Toyota (Part of Penske Automotive) may soon be dropping TrueCar leads.
Not sure all the details yet, but that's what a little birdy told me.
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Comment by James A. Ziegler on December 22, 2011 at 8:35am
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I predict two more states will fall in line before Christmas.... anyone want to make a bet?
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Comment by Keith Shetterly on December 22, 2011 at 8:04am -
@ Thomas: You have, my friend, hit Painter's "bent nail" straight on the head. Thank you!
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Comment by Keith Shetterly on December 22, 2011 at 8:03am
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@ David: AWESOME ARTICLE!!!! Well done!
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Comment by Thomas A. Kelly on December 22, 2011 at 6:03am
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The situation we have found ourselves in with TC/Zag is not unique. The difference is “we have found ourselves in it”, thanks in part to Painter’s rather large ego I believe. Some vendors/consultants have forever worked both sides of the fence. Painter grabbed the bullhorn and announced it. Broadcasting his belief that there are too many dealers and predicting the demise of the salesperson as we now know them today through the use of his “service” struck a nerve with the industry that will smart for many years to come. If that weren’t enough, Painter made clear of his intentions to carry his model into all elements of our industry. Thank you Mr. Painter. Your blueprint/battle plan for our demise is well received and appreciated.
In Painter’s most recent open letter to our industry he stated “TrueCar has never, and will never, sell or repurpose DMS data for any reason.” Then it is settled, the DMS data is collected to the inclusion of the purposes that Painter uses the data……without regard to where he collects it. If he will not repurpose data (he clearly states this), then in essence he is claiming that any data he receives was originally intended to be used for what he is using it for. I guess we need to figure out a way to explain this to the folks who’s information we collect. Our silly customers probably think the information we ask them to give us is being used to secure a loan and register the transaction of their purchase with our respective states or some such nonsense. Again, thanks for the heads up Mr. Painter, I am starting to understand how this all works.
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Comment by David Ruggles on December 22, 2011 at 2:18am
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I told you Kansas was going to fall...NOW where in the hell is New York? Are you guys (gals) such sissies that every other state in the union is going to take action while your regulators sit on their thumbs smiling?
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KANSAS AUTOMOBILE DEALERS ASSOCIATION
IMPORTANT NOTICE: Brokering Prohibition – True Car/ZAG
To: The Members of the Kansas Automobile Dealers Association
From: Don L. McNeely, President
Various models for motor vehicle sales programs have brought increased attention on marketing practices in Kansas and across the country. Commentators have most recently focused upon such programs as that offered by TrueCar/ZAG though there are many forms under which a dealer may be functioning, particularly in online arrangements. This comment will focus upon how such programs can actually unwittingly or otherwise set you up for possible violations of the Kansas Dealers and Manufacturers Licensing Act, particularly those declaring motor vehicle brokering illegal in Kansas.
It is KADA’s opinion that the manner in which programs such as that offered by the True Car program as it is currently structured and being offered in our state do in fact violate the Kansas brokering prohibition. This is particularly so as it relates to a dealership paying a direct marketing fee, which can be likened to a commission, for each vehicle sold. While it is not unlawful to pay an annual or monthly advertising or subscription fee for vehicle leads, it is a violation of the Kansas brokering law to pay a third party a fee—or other benefit--for bringing buyer and seller together.
It is our understanding that a number of Kansas franchised new car and truck dealers are currently doing business utilizing the TrueCar/Zag format. It is also our understanding that several formal complaints have been filed with the Kansas Department of Revenue’s Division of Motor Vehicles requesting an investigation of those dealers who have been identified.
As a reminder, the Kansas broker prohibition statute was enacted in 1990 and was ultimately upheld by the Kansas Supreme Court in 1992 (Blue v. McBride). K.S.A. 2010 Supp. 8-2404 (q), (r), and (u) which respectively pertain to new and used vehicle brokering describe prohibited and allowed practices and exceptions (display, advertising, soliciting and acting as a broker). These are also discussed and tempered in the McBride case to allow for the free exchange of information, but one must still keep in mind that brokering practices are squarely prohibited.
You have to pay attention to the laundry list set forth in the law. It defines a broker to be any person who, for a fee, commission, money, other thing of value, valuable consideration or benefit, either directly or indirectly, arranges or offers to arrange a transaction involving the sale of a vehicle, or is engaged in the business of (1) selling or buying vehicles for other persons as an agent, middleman or negotiator; or (2) bringing buyers and sellers of vehicles together, unless excepted. (See K.S.A. 2010 Supp. 8-2401(x).) As you can see the arrangements that are prohibited forms of brokering describe many elements of the TrueCar program which you should review carefully before engaging in such practices.
Another thing we have heard expressed about marketing arrangements are concerns related to legal issues of privacy, data use and ownership, as well as data access, particularly where a dealer has given outside access by a unrelated third party to its DMS system. The TrueCar/ZAG structure serves as a significant example of the issue. It collects transactional data from supposedly various sources to determine “the right price” to pay for a car. Vehicle pricing points aren’t necessarily the only issue, though. KADA is of the opinion that this can be ve
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This Blog is beginning to slow up as Christmas approaches... My plan is to heat it up again directly following the Holiday
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