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 Jim Kristoff on December 9, 2011 at 2:56pm

(DMS data harvesting from 9:00-11:00)

<br /><small><a href="http://www.automotivedigitalmarketing.com/video/video">Find more videos like this on <em>Automotive Digital Marketing Professional Community</em></a></small><br />

Comment by Mark Elliott on December 9, 2011 at 2:48pm

Letter to our TC rep,from our Marketing Director,

 

Michael,

I am writing this letter to let you know that effective immediately Byers Imports will no longer be using the ZAG/Truecar system. Please remove us from the site immediately.

 

I have to say that recent events as well as the general position and direction of TrueCar disappoints me greatly. As a automotive dealer it feels as though your organization is building an adversarial relationship with dealers. Your CEO is on video saying we need to eliminate dealerships and his tool will help arm customers to battle dealers. The "truth" company has been lying to dealers and harvesting data to be used against us. Your transaction data has come from us. Your system uses our data against us.

 

This video shows Mr. Painter's adversarial direction to dealers. I rarely become angry in a business setting but this astonishes me.

http://www.automotivedigitalmarketing.com/video/video/show?id=19705...

 

TrueCar is hurting our business on a daily basis. Everything he is saying in this video is exactly what we feel.

http://www.automotivedigitalmarketing.com/video/truecar-scam-1

 

We have had 3 deals this week in which we have had a deposit on the vehicle. Before the final deal was signed the customer came in with a TrueCar estimate that killed all the profit in the deal. So a customer you didn't bring us that we are not making money on is costing me $300 and you did nothing but hurt the deal. We were not unethically gouging the customer. We had cut the deals to close to bare bones and TrueCar steals any profits.

 

Plus you have tried to charge us when our employees have purchased vehicles. Just because your system has a person in it, does not mean you did anything to sell the vehicle.

 

I am disappointed because I used to be a huge TrueCar advocate. I lobbied with dealerships in my group to use the system and when it was just for car buying services, it was great. I never realized you were secretly using us to harvest data that would ultimately be used to hurt our business. I feel that TrueCar has swindled their dealers and is treating dealerships in the same manor they are trying to get the public to fight against.

 

Again, make sure we are removed from your system and please refrain from attempting to charge us for any more deals. We are out. I could continue to rant however, based on the direction Mr. Painter wants to go, I don't think TrueCar really cares about it's dealer "partners". I do think that creating an adversarial relationship with auto dealers will ultimately destroy TrueCar. I would not throw the word "truth" around quite so loosely.

 

Comment by Keith Shetterly on December 9, 2011 at 2:26pm

Love this quote from the Cleabook 2.0 (TrueCar's used car site, now live)--exactly WHAT does the part I put in bold mean??????

“We get information from dealers and consumer systems; we also buy data from DMS providers. And we’re now seeing it come in from lenders and insurers. It’s also available at state registration tax and title office. Anyone who buys or sells a car leaves a data trail, and understanding this data can be key. This data includes make, model, trim condition, configuration of cars, all down to the ZIP code,” Painter told Auto Remarketing.

http://tinyurl.com/7jjqtko

Comment by Stan Sher on December 9, 2011 at 2:19pm

I just left David a message and sending him an email.  Being that I am a former Honda Internet/BDC Director I want to share my experience of how I came to discover Zag.

Comment by James A. Ziegler on December 9, 2011 at 2:15pm

ClearBook Launch   http://tinyurl.com/7jjqtko

Comment by Jim Kristoff on December 9, 2011 at 1:30pm

Even if every dealer pulls the plug on TrueCar/Zag from their DMS.....another HUGE threat lurks....

I think that TrueCars affiliation with DealerTrack is more disturbing.....

Dealertrack see the deal structures when they're sent to the banks, they are a DMS, so they've got plenty of transactional data, including soft adds, reserve, vehicle information, customer information, credit information....etc......

You can take the original MSRP of the vehicle and calculate back to the options and cost of the vehicle to operate their pricing information.

In my humble opinion, there needs to be legislation to stop this information from being used by any entity.......

Here is the press release from ALG in August....

https://www.alg.com/DealerTrack+to+Sell+ALG%2c+Inc+to+TrueCar%2c+Inc

08/22/2011  |  Press Author: ALG Inc.

DealerTrack to Sell ALG, Inc. to TrueCar, Inc.

Lake Success, N.Y., August 22, 2011 – DealerTrack Holdings, Inc. (Nasdaq: TRAK), today announced that it has signed an agreement to sell its wholly owned subsidiary, ALG, Inc., to TrueCar, Inc. In connection with the sale, DealerTrack has entered into additional commercial arrangements with TrueCar, including a perpetual, royalty-free license for DealerTrack to use certain ALG intellectual property and data in its products and services.

The transaction is structured as a tax-free reorganization, and in consideration for the sale of ALG, DealerTrack will receive a 15.0 percent equity interest in TrueCar and warrants to increase its ownership interest to up to 19.9 percent. As part of the transaction, DealerTrack will have the limited right to appoint a director to TrueCar's Board. The sale is expected to close in the fourth quarter, subject to customary closing conditions and regulatory approval.

DealerTrack expects to recognize a pre-tax gain for GAAP purposes of at least $40 million on the sale, but does not expect this transaction to have an impact on 2011 non-GAAP guidance. DealerTrack will provide additional details on the financial impact of this transaction during its third quarter earnings call.

Mark F. O'Neil, chairman and chief executive officer of DealerTrack, commented, "This transaction exemplifies our strategy of effectively allocating capital to maximize value for DealerTrack stockholders. We are not only selling a business which we have grown significantly since we acquired it back in 2005, we are making an investment in a high-growth, progressive company that is positively impacting the way cars are retailed in the U.S. market."

Scott Painter, chief executive officer of TrueCar, commented, "We believe that, in combination with ALG's core competency of providing industry-leading residual values for the automotive market, TrueCar's business will be enhanced and continue to generate exceptional growth as more of the car buying process moves online. In addition, we believe that our acquisition of ALG will significantly improve our relationship with OEM's." Painter continued, "Lastly, we are pleased to be entering a strategic partnership with DealerTrack which includes a two year commitment to help us effect a smooth transition of the ALG business." Based in Santa Monica, California, TrueCar simplifies and clarifies the car buying process for consumers by providing accurate market information which helps buyers make better, more informed decisions. TrueCar saves consumers time and money by providing price clarity and transparency, while delivering the benefits of higher close rates and vehicle sales to dealers. TrueCar reaches consumers
Comment by Brian Willian on December 9, 2011 at 1:24pm

Once again, this guy is on point.  Read this blog:

www.jeremyalicandri.com

Again, I do not know this guy.  I have never even met him.  But he sure does bring some great information and insight to the table.  I wish he were getting more visible in the discussion.

Comment by Mike Warwick on December 9, 2011 at 1:21pm

Just to clarify, the Truecar reps call to my boss was not specifically about my blogging.  It was an attempt to keep us as a client and the blogging was brought up because they believed I was misinformed about Mr. Painter's intentions and Truecar's goals. It was funny because I asked about F&I and Fixed Ops tools coming down the pipe and the first answer from the rep was, "I don't know about those products" but a few minutes later when it was brought up again, the answer was "those won't be around for six months, we're focused on helping you sell cars today."  Rest assured, Truecar is scrambling right now to figure out how to keep their cash flow alive. Honda's stance is a serious threat to their viability as currently constructed.  If other manufacturers follow suit, we could see the dominos start to fall very quickly.

Comment by Keith Shetterly on December 9, 2011 at 12:22pm

Wanna read the Zag Dealer Agreement?  This appears to be one:  http://dl.dropbox.com/u/12427162/ZAG%20CONTRACT%20AND%20WELCOME%20P...

Interesting reading

Comment by Al Mosher on December 9, 2011 at 11:56am

I have been following this blog for the past few days and I just finished watching the video of Mr. Painter's presentation. I f you have not watched it yet, you need to. I think there are three things that I find to be the most disturbing:

  1. There is no allowance in the TrueCar formula for any cost of sale out side of the dealer's cost for the vehicle itself. We all know that having a top-notch facility costs money and that may be most particularly true in the service & parts operations. Is it not worth something to the customer to know that he can get his vehicle serviced quickly and efficiently with the parts readily available using the latest in equipment. It certainly is to me.
  2. There is no allowance in the TrueCar formula for the "customer experience" factor. Intelligent, well-trained salespeople who can demonstrate the features of the vehicle, answer my questions and ASSIST me in my buying experience, a dealership that makes me feel welcome and management that makes me feel like they value my business and treats me with respect are all worth something over dealers who do not do these things.
  3. When I buy a car, do I not have the right to assume that the information about that purchase is between that dealer and I, including the information about my personal finances that I provided so the dealer could assist me in obtaining financing. I am appalled that TrueCar (and others, apparently) have access to all data stored in the dealerships's DMS whether that sale originated with TrueCar or not. I am no attorney but it certainly seems to me that most of the boilerplate Privacy Notices used by many dealers don't come close to disclosing this kind of access to customer data. In addition, if what I have read over the last couple of days is anywhere close to true, TrueCar does not disclose on anything I could find on their site that they sell consumer's information to other lead providers. This playing fast & loose with personal information certainly seems to run counter to the requirements of the Fair & Accurate Credit Transactions Act.

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