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 November 27, 2011 at 10:25pm

Pat, I disagree with you 100% that what you suggest is any kind of simple answer for this issue.  I agree with you 100% that all the things you mention need to be done.  Zag and TrueCar don't work on the value proposition you suggest, and the day we get all dealers to be how you mention will be one day short of never.  And that umbrella is how Z and TC operate.

To use your PC parallel, the PC world abandoned dealers long ago because Dell provided them cheaper on toll-free lines and later directly on their website.  The price has continued to drop because PCs became far more robust and the price point became "why repair when I can just get a new one for a little bit more?".  Vehicles are not at that price point yet, but THEIR PERCEIVED quality is more even between the most of the major manufacturers than ever before.

Don't bank a lot on the consumer's loyalty, then.  If used cars can be sold nationwide by Texas Direct for $100million+ a year that each involve tens of thousands of dollars of financing, then NEW cars can be done the same way.  The franchise laws prevent it, for now; Z and TC erode it from another angle by creating pricing pressure to "help" the consumer.  What a crock.  It's about their profits, and they should at least be honest about it.

It isn't about the dealers for them.  And every day that goes by letting price be king of our profits, through them and other mistakes we make, it's less and less about the dealer to the consumers.

Thanks!

Comment by Pat Hayes on November 27, 2011 at 10:14pm

The problem is solved very simply.......

 

Demand cars from the manufacturer that are better than ever with ever increasing fuel economy and safety features.

 

Train your staff to actually educate consumers on those very revolutionary features that these products offer and most importantly how these features will change your customer's life for the better.

 

Provide WORLD CLASS service in your service departments.

 

Why?

 

Because people will pay for it!!!!

 

Want proof - Apple Computer already proved that by providing world class products sold by world class trained sales agents in their stores led by the most influential salesman of our time, Steve Jobs, and by providing world class service with such things as an Apple Genius in store at every location.

 

Do you have this in your dealership? Are your salesman world class salesman who can really relay how someone's life will be changed by this vehicle? Is your service department truly world class and provide your customers a reason to come back?

If you can't answer yes to those questions it will be difficult to ask your customers for all the money. In lieu, many are forced to subject themselves to this incredibly cuthroat below invoice pricing method that leaves few survivors. This happens to also be how less than truthful sales agents are attracted expecting to earn a quick dollar by pedaling unfounded half truths and information that leads to your dealerships ultimate demise.

 

It happens in the PC business everyday. PC's running Windows continue to be advertised cheaper and cheaper. Companies once large like Gateway and others have gone by the way side. Few are left to survive in this cuthroat environment, while companies like Apple who seemingly ignore the cost driven frency of some consumers and simply pursue 3 areas .... World Class Products, World Class People to sell them, and World class service after the sales to help make sure their customers are taken care of. The many things that you can do with an Apple can be done with a PC. Apple just does it better. People are seeking simplicity and things that actually make their life easier.

Are you doing something to make your customer's life easier? Are you increasing the value of your brand? In the absence of value consumers and dealers who can't provide value will seek to drop the price to make up for this lack of value.

Our business is filled with below value perception based on below value selling methods and below value service after the sale.

Spend your efforts on this in your stores. Your world will change.

 

 

Comment by Tamara Darvish on November 27, 2011 at 9:51pm

There really is only one way to stop this nonsense with these vendors; but, it will require all Dealers to enter into a simple gentleman's agreement.  Unfortunately - greed and ignorance often take priority with some rather than logic and long term planning.

Comment by Bruce Hartz on November 27, 2011 at 9:35pm

REALLY! I see no point in doing business with company's that force me to loose money. I can do that on my own really easy and not have to pay anyone to help me.                                                                                                                                                                                                                                                                                                         Why stop here I will buy every lead possible from all the blood sucking 3rd party lead providers and loose even more money. Next we better pay someone 30k a year to run a SoMe campaign to make sure our 250 facebook fans are happy. Lets not forget we HAVE TO sign up with Edmunds or they will sell our backyard to someone else.

Next year when I attend Digital Dealer12 I'm bringing at least a million dollars so I can sign up the 200 attending vendors that I can't do business without their services. 

Or Maybe I just spend some of that on training our people on how to answer calls properly, use the CRM tool right, and train them how to sell from strength and not weakness. A little too idealistic? maybe

Comment by Joe Clementi on November 27, 2011 at 8:56pm
I don't believe there is a single person on this site that doesn't understand the value of a process driven result! We all understand competition. What is unfortunate and not within the guidelines of good business is a vendor(s) dictating our prices. If it was only 10% of business as some have indicated then it would be no big deal. Look at a tv or listen to the radio lately? They advertise the simplicity of prices thrOugh their programs. Have you been online? Front line people are in it everyday.
Comment by Steve Marsh on November 27, 2011 at 8:52pm

Well, my name isn't on the building so in my case have to live w/it, although today I did an audit on the ZAG invoices from prior month, found 3 of 9 that were active in our CRM 3 days, 7 days, 3 weeks prior to the ZAG hit online coming in...so the folks were already OUR customers...so tomorrow I will call our buddies at ZAG and tell them we aren't paying the fees to have our current working prospects run to ZAG for a 'better deal"..not the purpose for having ZAG, supposed to be 'found' business.

Comment by Michael Deville on November 27, 2011 at 8:51pm

Have a customer now. 1500 over their price, because of salesmanship. Bandits YES, no franchise lic. and dealers that can't generate their own business pay to lose money; too funny.There should be a lic. agreement with the state or feds to operate and a fine if for any reason that price is not available, and or that vehicle is not in stock at their dealer body. Dealers pay millions to get a Franchise and are willing to give it away to a price $#$%@

Comment by SCOTT TYNER on November 27, 2011 at 8:29pm

I think the people getting the savings (ie. ZAG) should know that they are really paying a $300 fee. I think that if we are going to cut a deal that far to get that customer...we can do that without ZAG. But hey!! I'm just a salesman...

Comment by James A. Ziegler on November 27, 2011 at 8:14pm

Dealers go after True car and ZAG... video    http://www.youtube.com/watch?v=ObJV6QsgTwM

Comment by john lee on November 27, 2011 at 8:04pm

We explain to the customer how USAA is just pushing up the cost of doing business.  There are some great ways to handle a ZAG lead, we all need to expose their inherent purpose of making $300.00 which is hidden behind the perception that they are helping the members.  If you want to grow a pair you can get some help at GNC.

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