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 James A. Ziegler on December 19, 2011 at 10:50am
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My dealer just told me that ZAG voluntarily suspended doing business in Louisiana because of the state investigation of their business model. Does anyone have more precise facts?
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A dealer just told me that ZAG is suspended from doing business in the State of Louisiana until further notice. I don't have the facts, is this ZAG's choice or did an investigation of something or other shut them down. Anyone who knows the facts please post it here JIM
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Comment by Jim Kristoff on December 19, 2011 at 7:09am -
......continued......
The dealer management system is the nerve center of a store, containing information on everything from customer transaction and financing data to vehicle inventory and the store's accounting reports.
DeLongchamps said Group 1 dealers, acting independently, have signed up with TrueCar over the years. He said Group 1 has had privacy concerns about any third-party vendor that is able to extract data from dealership operating software.
Painter said that while Group 1 had been a significant customer for TrueCar, its 42 participating stores accounted for less than 1 percent of the 5,840 dealer franchises participating with the shopping site. He said TrueCar has dealerships in all markets being vacated by Group 1. Group 1 has stores in 15 states.
Honda does not prohibit Honda or Acura dealers from advertising vehicles below invoice. But the company has clear guidelines that put a dealer's local marketing allowance at risk if a dealer does so. The allowance can account for 1 to 2 percent per new vehicle sold, or $300 to $600 for a $30,000 vehicle.
TrueCar prides itself on finding discounts for vehicle shoppers by getting dealers to bid for the business, many at below invoice. Invoice typically is several hundred dollars above the dealer cost of a vehicle.
But the enforcement of Honda's standard longstanding policy on advertising below-invoice pricing prompted TrueCar this month to put a disclaimer on its Honda shopping page. It warned Honda shoppers with a banner that they might not get TrueCar's low price.
TrueCar has big expansion plans. Next month TrueCar becomes the exclusive online vehicle shopping partner of Yahoo.com, the search-engine giant. TrueCar is paying $50 million a year over three years for the partnership.
As a result of the deal, TrueCar expects traffic on its Web site to jump from a couple of million unique visitors a month to 20 million.
TrueCar's Painter has said he expects sales from TrueCar leads almost to double in 2012 to about 500,000 vehicles, and participating dealer franchises roughly to double, to 10,000.
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Comment by Jim Kristoff on December 19, 2011 at 7:08am
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Group 1 dumps TrueCar to shield data
Honda officials asked dealership group to rethink dealings with lead generator
Group 1 Automotive, the nation's fourth-largest auto retailer, last week ordered all participating stores to cut ties with TrueCar.com, citing concerns over the security of data plumbed from dealers' computer systems by the fast-growing online lead generator.
The move came soon after officials from Honda suggested to Group 1 executives at a Honda event last week that they rethink their stores' dealings with TrueCar, said Peter DeLongchamps, Group 1 vice president of manufacturer relations and public affairs.
A Honda spokesman said he was not aware of such a request.
TrueCar has been hurt by enforcement of a Honda policy that threatens to withhold marketing dollars if dealers advertise vehicles below invoice price. Many shoppers on TrueCar's Web site are able to secure prices below invoice as dealers bid for the business.
Group 1, of Houston, has 108 stores, 42 of which were TrueCar participants. Of the 108, eight are Honda dealerships.
TrueCar has lately been a target of criticism among retailers that say the rising influence of Internet shopping sites is driving down transaction prices for new vehicles.
But Group 1 cited not pricing but potential privacy risks to consumers and to dealerships posed when TrueCar and other vendors gain access to data contained in dealer management system software. TrueCar requires access to verify vehicle sales resulting from the leads it provides.
And DeLongchamps said the company was not convinced that the online leads generated enough revenue and profit, given the requirement that TrueCar have access to dealership data.
"We questioned the value proposition," he said.
DeLongchamps said several Honda officials at the Las Vegas event had asked several Group 1 officials to rethink Group 1's dealings with TrueCar.
American Honda Motor Co. spokesman Chris Martin said Honda has had no official communication with Group 1 about TrueCar, though he said he can't confirm what takes place in conversations between Honda field officers and dealers.
The 42 Group 1 stores that had been TrueCar participants paid TrueCar a $299 fee for any lead that resulted in the sale of a new car and $399 for a successful used-car lead.
In addition to offering discounted prices to shoppers, TrueCar's Web site, truecar.com, allows shoppers to view transaction prices on vehicles in their area. TrueCar says it gets the data from 30 sources, including financial institutions, but not from the dealer management systems of participating dealers.
TrueCar CEO Scott Painter said he was sorry to lose Group 1 as a customer and said he would work to persuade the group to come back.
He defended TrueCar's data security, saying TrueCar uses dealer data only to verify vehicles sold from TrueCar leads and for no other purpose.
"There has been a lot of misinformation about us," Painter said.
He said he has spent most of the past several days answering questions about the integrity of TrueCar's processes to protect dealer data.
Dealers have increasingly voiced concerns about what is happening to data extracted from dealer management systems by third-party vendors. They have raised the specter of data being sold to marketers and others without the dealers' knowledge.
The dealer management system is the nerve center of a store, containing information on everything
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While they're selecting where to send the customer that inquires, I believe their rules state that if the customer is already shopping you they don't get paid for that one...or is it a previous customer, not sure how that works.
So, theoretically, wouldn't it be better for them to send your customers to another dealer that didn't have them so they could collect the $299.00. Just thinking out loud. JIM
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Comment by Larry Muirhead on December 18, 2011 at 12:18pm
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Forget the Y, X or digital generation. I'm not sure what we should call todays generation.
Is it the "I want it free" generation. "I don't care about you or your family I just want the cheapest price" generation. 'I will trample you and kill you" generation. (They do that over a good deal for $20 camera)
Yes, we're supplying our own data feed to T/C, kicking and screaming all the way down.
Sales associates are barely surviving. In fact, in many cases making minimum wage when you factor in the insane hours they work with no overtime compensation. Most customers don't give 2 craps about wheather or not your dealership survives or not. They figure they will just go to the next store and put pressure on them to comply. The sites and articles on how to buy a car train them that dealership are out to get them. All the "Tricks" that dealers play and how to avoid them articles funnel people to truecar.com and sites that spring up like them. It's become an ugly process no matter how we dress the pig up.
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Comment by Keith Shetterly on December 18, 2011 at 11:53am
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@ Mike: www.TrueCEOSalary.com and see how he likes it . . .
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Comment by Mike Warwick on December 18, 2011 at 11:49am
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I'm a little shocked that some of the people who support Truecar on these forums base that support on Mr. Painter's recent flip flops. He has been clear for YEARS on how he wants to change the car business - (one price, no salespeople). As soon as he starts getting blowback from dealers (aka his revenue stream), he wants to walk back all of his previous comments. Come on folks, you can't be that naive. He is confident that he has the public on his side but he can't make Truecar work without our revenue and data so he has to say whatever he thinks dealers want to hear to keep them from defecting.
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Comment by Larry Bruce on December 18, 2011 at 11:12am
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@Mike
I know Mike I have asked the same question with the same answer and there in lies my problem, the lies. If you have to lie about it you shouldn't be doing it and you know it's wrong.
Dealers this isn't the first time your DMS data has been stolen, but it is the first time it has been used against you. This is a wake up call get it under control or risk further profit erosion.
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Great points Larry. I actually asked my former Truecar rep if we could send a file with just the matching information to confirm a sale. The answer was no. Clearly, Truecar wants all of the DMS data and Mr. Painter's claim that they don't use this data is ridiculous on it's face. If they didn't need the DMS data, they would amend their agreements to require a minimal .CSV file. We all know that change isn't going to happen. None of their other sources can provide the detailed, timely data they need to power their site. Without this time sensitive data, their gaussian distribution becomes useless.
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