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 David Ruggles on December 14, 2011 at 12:45pm -
Sent to Scott Painter, no response, didn't expect one.
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Comment by David Ruggles on December 14, 2011 at 12:45pm
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With some editing. I posted this on my blog autosandeconomcs.com on Moday:
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Comment by David Ruggles on December 14, 2011 at 12:44pm
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This will be running in WARD's soon.
The War with TrueCar
Open Letter to the Automotive Industry from Scott Painter, Founder & CEO of TrueCar, Inc. and responses by Ruggles
Monday, December 12, 2011 12:01 am
Painter :Our world is changing. Unprecedented access to information and a massive shift in consumer behavior has resulted in a challenging new automotive retail landscape. It has also enabled a consumer appetite for data transparency. To hide from evolving consumer behavior is to deny change. At TrueCar, we embrace this opportunity. We also believe that transparency is the centerpiece of trusting relationships. Some in the industry disagree. We would like to make our position clear.
Ruggles: Transparency is NOT the objective of auto dealers. Survival is, followed by net profit. It takes gross profit to have some net profit left over at month end. Is there another industry where consumers feel they have the right to know a sellers actual true costs? What gives consumers the right to that information in the first place? Your aim of providing transparency is NOT your only aim. Making money in the doing is. The behaviour by consumers wanting to know a car dealers bare costs is NOT something new. In 1970 credit unions would arm their members with "dealer cost." There were books available on every news stand. The delivery of the information is what is different.
If you want total transparency, give consumers actual bare cost down to net net net. Then allow the negotiation to be based on the gross profit, say a thousand or two. Do you really think consumers understand gross profit. Do they understand the expenses that are paid out of gross profit? More importantly, do they care?
Over the course of time car dealers have had their margins trimmed dramatically by their OEMs. When I started in the business the margin on large cars was 22.5% with a 2.5% hold back. "Trunk money" was available only for special promotions, but it was no where near as prevalent as today. The profit a dealer makes these days has moved to "trunk money," as the dramatically narrowed margin and increased availability of information to consumers has dictated it. And you are looking to disclose this information as if consumers have some kind of inherit right to it.
The auto business is a business of negotiation. AND consumers can shop. Consumers aren't bound by the same rules that auto dealers are. You seem to be saying that you would like to remove the negotiation aspect of the business while making money for your own company in the doing. Its not like you are performing some needed public service. You think an efficient market for new vehicles is good for everyone? How does that jive with the dealer, who has made substantial investment, making a reasonable return? If they don't, who will be around to provide other essential services to the consumer? The factory?
You're a business man and have closed some deals where negotiation has been required to reach agreement. You also know that in negotiation if neither party gets their feathers ruffles at some point, money has been left on the table. I suspect that in your very best negotiations, you negotiated without appearing to negotiate at all. I suspect that is how you have gotten so many dealers to sign on initially. That might even be how you gathered in $200 million in venture capital. I take my cap off to you for being such an artful negotiator. But don't in the same breath talk about transparency. Your objective is to make your deal while adopting the APPEARANCE of transparency as a negotiating tactic. How do you expect to make money in a negotiating busin
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Comment by Keith Shetterly on December 14, 2011 at 11:06am
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@ Stanley: They will take my position from me when they pry my cold, dead hands from around it. :) They haven't changed a thing, and until they DO change then I will be right on this issue the same as always. Kill The Beast!!
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Comment by James Easter on December 14, 2011 at 10:46am
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No doubt Jim! I can see that happening...just a matter of time.
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Comment by James A. Ziegler on December 14, 2011 at 10:44am
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Here's another question... What happens when a consumer that paid MSRP or an addendum price over MSRP decides to file a "price gouging" complaint by leveraging TrueCar data? I can't think of a courthouse in the golden state of california that wouldn't find on the side of the consumer. It is only a matter of time...... Imagine the discovery process of any dealership you know where every sale price is scrutinized for fairness against the low water mark published by Painter and the lot........ Spooky!
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I remain unchanged... working behind the scenes stirring up poo-poo
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Comment by Jim Kristoff on December 14, 2011 at 10:24am
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TrueCar has done a great job of taking $299.00 worth of profit from the Dealers pockets and put it in their own!
Kill the Beast!
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Comment by Jerry Thibeau on December 14, 2011 at 10:15am
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@Stanley, NO! NO! & NO!
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Comment by Stanley Esposito on December 14, 2011 at 10:04am
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This is interesting. I guess I will see what kind of power Scott Painter has. He has been in communication with some of the most outspoken people from this blog. Will the tone of the post change? Has they changed already? Have any opinions changed?
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