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 Joe Clementi on November 28, 2011 at 10:55am
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@Larry. You summed this up very well. The idea of passing on deal after deal due to pricing below costs isn't a beneficial proposition either. There are other issues to consider such as; market share within your own PMA, sales volume within your disrict, lost allocation due to sales loss etc...
Someone mentioned "spending more money to combat these guys". Are you kidding me?? As a mid-sized dealer in a major metro market trying to compete within our own marketplace is enough. Now you want me to spend more money than I have in my budget to advertise against them? They have many more resources than I do!
All we want is a level playing field where we can compete on our core values. Processes, people and products are all we have to compete with. On a level playing field where price is not the core issue, my team wins on service every time!
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Comment by Wm J Baierl on November 28, 2011 at 10:53am
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The only reason this works for third party vendors (spending millions on electronic advertising to convince consumers to allow these charlatans to insert themselves between us and our customers) is because the customers want transparency and a more pleasant buying experience. Can't make that trend go away by dictating it. If we want them out of our pond then we should do a better job of giving the customer what they want - in the process maintaining control while making them feel in control. Choose your battles - win the war.
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Comment by SCOTT TYNER on November 28, 2011 at 10:48am
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Kool...always glad to help.
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Comment by James A. Ziegler on November 28, 2011 at 10:42am
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No problem Scott, I realized that and then it also struck me what you were saying, and, if you notice, I changed it. You are greatly appreciated.
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Uh! Jim...that was a compliment.
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Comment by Keith Shetterly on November 28, 2011 at 10:36am -
@ Bobby - you are always my brother, brother! I'm disagreeing that this issue comes down to your two solutions, of which #2 was the one that was really left. Negotiation is like poker, and if they know the bottom-line pricing then they know the cards we hold on the vehicles. CarFax has similarly "helped things along" by putting pricing info on the CarFax for used cars . . . ugh.
I encourage everybody to read this AutoNews article quoting Scott Painter, CEO of TrueCar. If you really want to know what you're facing, you need to understand that the vision he, er, "paints" of the future completely eliminates the sales process you are suggesting will overcome this.
He just spent over $80million buying the company that sets the residuals on leases.
http://www.autonews.com/apps/pbcs.dll/article?AID=%2F20110831%2FFIN...
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Comment by Larry Muirhead on November 28, 2011 at 10:31am
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Don't ya love the customers who come in with KBB and Edmunds print outs on their trades. THEY SEE THE VALUE in THEIR STUFF! They sell us on the value of their trade.. new tires last year... did the brakes 20K miles ago.... nevermind that it's a 8 year old vehicle with 139K miles on it.. it's EXCELLENT and garage kept! There you'll have KBB and the rest of them backing it up. I'd just love for Mr. Kelly to swing into the store to purchase our overallowed trades.
It's not the Internet that KILLS... It's PEOPLE that kill.
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Comment by Tom Drommond on November 28, 2011 at 10:28am
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James - the one thing I haven't seen is the fact that I can still walk the deal. TrueCar can't force me to sell a car.
All this tough talk about pricing and gross leaves out the real problem. That's compensation. For years we, as Sales Managers desking deals, have been programmed into low gross equals small paycheck. But which gross? The gross after pack, without holdback, plus accessories, before SFE, before EBE, before advertising credits and co-op...you get the point. There are many revenue streams in a dealership. New car sheet gross is only one of them. I think the true problem is that our pay plans are based on 1990s business models for gross and volume or "the way it was when I got in the business" or some other "gut feeling" as to how much a car deal should be worth in compensation. Before you can judge the value of any vendor or marketing approach, you have to first judge the value of your sales staff. How much will you pay the people involved to complete the transaction? Is it worth the amount of effort you expect? Can your sales staff live on that in the current market? If they can't, what are you doing about it to get and keep the best talent? Is your staff trained to handle the current ways people use to buy cars? Can they overcome the price objection? If these were the only customers you had, would you go out of business or find a way to win?
I have. I make money on ZAG deals. It may not be apparent to the desk manager, but it's a fact.
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Comment by Keith Shetterly on November 28, 2011 at 10:28am
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@ Jim Corwin: Testify, brother! You hit the nail on the head.
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Funny Scott, made me smile BUT, in truth we've already got seven pages of responses before 10:00 A.M.. I think this thread has a lot of attention no matter how it's posted. OH, wait, I see what you're saying...the SEO Tags...Yes, I just used some standard stuff I had to cut and paste...We'll get on it. Thanks.
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