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 Mike Warwick on December 20, 2011 at 9:16am

Does anyone really believe that they are not using the sales data to power Truecar?  The question you have to ask is "Why wouldn't they?"  We've given them permission to use it and it is by far the best data that they have.  Why would they use data that is aged when they have access to instantaneous sales data? The Gaussian curve is only relevant if the data is fresh. If they don't use this data, why won't they allow dealers to send a .CSV file with name, address, email and VIN?  That's all they need to verify a sale. 

Comment by James A. Ziegler on December 20, 2011 at 9:16am

You're right Eric, this is not public data. The consumer gave this data to the dealer expecting government mandated privacy. Nobody ever said "Here's all of my information Mr. Dealer. Please distribute it so Scott can buy it." 

Comment by Al Mosher on December 20, 2011 at 8:39am

Outside of TrueCar's stated purpose of wanting to eliminate the dealer from the car buying experience, that has always been my largest area of concern. They claim to only be getting the information necessary to confirm whether a TrueCar lead actually purchased a vehicle from the dealer for billing purposes and that other data comes from these mysterious sources but it certainly appears as if someone is aggregating the data from these various sources to produce a complete picture of every transaction. Even if every source for all this varied data comes from sources that have a legal right to possess it for their use, doesn't the selling of this data and the compilation of all this data violate privacy provisions of Gramm-Leach-Bliley and the Fair & Accurate Credit Transactions Act? It would certainly seem so to me. 

I think every dealer needs to closely examine who they have given access to their data. They need to make sure these companies are using the data for only the purposes necessary in each individual relationship and not sharing this information with third parties the dealer may know nothing about. They need to make sure their DMS provider and others with access to their data are holding this data to the highest of security standards in compliance with the law. The Colorado letter does not specifically address data but I think it does make clear that some, if not most, regulatory agencies are going to hold the dealer ultimately responsible. Every dealer needs to make sure they know how their data is being used and make sure they are comfortable with the answers to that question.

Comment by James A. Ziegler on December 20, 2011 at 8:05am

Where is all of the data coming from?

You know Scott Painter keeps referring to "Data" that is readily available in the market that does NOT come from Dealerships' DMS. That was an "AHA" moment for me.

Okay, I am sure government vehicle registrations and some other sources might have data that is public BUT NOT the specific data these people are getting. It appears to me that information could only have originated in a Dealers DMS. 

So, who's stealing it, repackaging it, it repurposing it, and selling it? That's a bigger question than the other questions I've asked. 

Could it be your DMS provider? The very people we contract to be the 'keeper' of the data? Could they actually be pilfering our information and reselling it? I couldn't picture ADP or Reynolds doing this. BUT, it bears asking

Could it be your CRM or Lead Management provider? That might be more likely because they dig deeper into your data than anyone. 

Could it be the people you submit your credit applications to? That's a scary thought isn't it. 

Truth is, somebody or maybe everybody is stealing customer data from the dealers and it's showing up on the open market. 

As in Colorado, the government is warning the dealers  they are violating the law as it stands in the current situation with TrueCar, which I am certain will be resolved after they make several business model adjustments. 

Somebody said Truecar was "Banned" in Colorado. I believe that is a misstatement... "Temporarily Setback" might be a better analogy.

The real issue is growing and there needs to be legislative protection of the dealers against lifting customer data, some of which is a privacy violation I believe,  and then selling data to each other or passing it to third and fourth party affiliates. 

It needs to be a crime that is prosecutable and enforced at the Federal level. NADA will not get involved with the TrueCar issue because they do not want a Anti-trust violation. Sobeit... But I believe lobbying for Data Protection at the federal level is their job...........

 

Comment by Larry Bruce on December 19, 2011 at 7:20pm

Agree entirely Mike good call. All if a dealer is educated on what TrueCar is going to do and still chooses to participate...that's their choice. All I ask is that they be educated on what going to happen. 

Comment by Mike Warwick on December 19, 2011 at 7:16pm

I would strongly caution against calling out individual dealers or groups who are on the Truecar Program.  We've done a great job of educating dealers on the issue but ultimately, this needs to be decided by each store or group on the program.  NADA has issued a cautious warning to the state associations that under the anti-trust laws, organizing an effort to boycott a company is illegal and would subject an association, their officers, their board members, and their members to possible civil and criminal penalties.  Continue to educate but let the dealers decide.

Comment by Keith Shetterly on December 19, 2011 at 6:44pm

@ Stick:  I *promise* I will call you back tomorrow.  Thanks!  :)

Comment by Keith Shetterly on December 19, 2011 at 1:18pm

From me at http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&di...:  "TrueCar is not a traffic generator. And, to Chuck's point, TrueCar has stated they are going after the financing and aftermarkets. $200million in financing is chasing a billion-dollar IPO of stock in partnership with USAA (investor), DealerTrack (investor), ResponseLogix, etc.--this has NEVER happened before. They've saved consumers, they claim, $1.5billion ALREADY . . . for the 5,000 or so dealers on board with TC now, that's $300,000 they helped "save". How much of that was dealer profit? Which meant paychecks to employees? Which meant payments to vendors? Even 10% is $30,000 to participating dealers--and don't talk about financing (which he will have live within six months or less) or holding on a trade (www.ClearBook.com is their effort there). TrueCar needs you only for a little while longer. They have replaced Cars.com as Yahoo.com's auto partner . . . do you even realize what that means??"

Comment by Keith Shetterly on December 19, 2011 at 1:02pm

I would guess that would NOT be AutoNation.  ;)

Comment by James A. Ziegler on December 19, 2011 at 12:58pm

 I have a vision, a prediction,before the end of tomorrow one of the biggest dealer groups is pulling the plug just like Group1

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