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 Mike theCarGuy Correra on November 27, 2011 at 6:24pm -
The worst part about ZAG/TrueCar is that they have nothing to lose by encouraging dealer price wars, they get paid no matter how low the dealers set prices. To a certain extent its our own fault but its difficult to ignore the little red/yellow.green lights that show up next to your prices in the dealer side of the ZAG site. Its a real bummer to go in to make your adjustments and see that your $700 UNDER invoice price has a yellow light and shows to be 800 OFF OF MARKET! ZAG loves to say that they dont set pricing for a market and that keeps their hands clean but their practices make them the real culprits even though they claim that the consumer benefits in the end. That being said it is up to the individual dealers to set their own prices, and theres always that one that drives the market down to the absurd...
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Comment by Steve Marsh on November 27, 2011 at 6:24pm
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Ya know..I am ok with the ZAG pricing on our Lexus'....however, It would be nice that the customer also appreciates just how good the deal is! Today we sold a new IS250 $2650 UNDER invoice (Oh, yes, ZAG was happy to let the guest know all about the dealer cash)...and when his rate was a whopping 1.9%APR he wanted even less! Made the deal but still kinda irks you when you ask him "Do you realize what kind of a great deal compared to others you already have?" he says "yes, but I am deserving of it"...what?
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Comment by Larry Muirhead on November 27, 2011 at 6:21pm
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SAD? If you only knew how I feel looking at the back office of my ZAG Account to see where the prices are on a 2012 NEW Vehicle model (Dealers within 60 miles) and find out that the competition feels it necessary to be UNDER invoice! That is just face scrunching sad. I'm I frustrated? YES. I can remember the day where dropping down to cost on a vehicle was unheard of... now in my market area it's the NORM. I'm I the only one saying anything about this situation?
I love the Consumer Report this last month.. Watch out for the "TRICKS" Dealers play. That's nice. I find it a trick to put that on their cover to get people to buy their magazine. I wonder if they paid full sticker for the magazine? I wonder if they found out what the invoice was for the Consumer report magazine and demanded to pay less?
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Comment by James A. Ziegler on November 27, 2011 at 6:20pm
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We are the only industry in the world where our manufacturers routinely leak our invoice cost to anyone who wants to know. Then the bottom-feeders show up and it gets worse....
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Comment by Chris Dugan on November 27, 2011 at 6:18pm
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David, I agree, but these companies play on our fears - "will I be the only guy not at party X?" it's a sad state of affairs indeed.
Again, I'm new to the industry, but I think this is where the what-do-we-offer card comes into play. A good customer driven experience will of course never be replaced by gimmicky websites and fear mongerers.
...At least I hope.
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Comment by David Ruggles on November 27, 2011 at 6:15pm
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Dealers could have nipped ZAG/TrueCar in the bud, but have been their own worst enemy. When I have been played for a chump I have had only myself to blame.
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Larry how sad a commentary on our business when someone like yourself is proud just to be above invoice.
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Thanks Jim. I'm new to the industry, and I'm a website guy not a sales guy. I'm constantly shocked by the amount of money we spend on classified sites and other sources that are essentially living off our hard work. To me, this is the same idea.
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I just reviewed my pricing in ZAG and try to keep prices above cost / invoice on new models. Its sad to see the prices of yet to even be released vehicles that dealers were already offering under invoice! The paint has yet to dry on these cars that have yet to be released and dealers are blindly giving their cars away leaving all the money on the table. WHY? Dealerships must be swimming in money?? They are so profitable that they have to give thousands of dollars back to the community? Most larger dealers have advertising costs, operational costs and actually do try to stay in the black aside from having to pay out more than $225K in monthly expenses. Do the math.. even if they sold 200 cars and made $1000 profit on each, they still don't have enough to keep the lights on. Wana argue already?
Go to the parking lot of the avg Toyota, Honda, Chevy, Mazda..etc, and look at the cars that the sales associates are driving. In the last 10 years of managment in the car business, I've seen the top certified professional sales associates forced out of the business from the "MINI DEAL' Syndrome. When will the MADDNESS stop? To see $2000 under invoice on a car with $500 Dealer cash from ZAG/TrueCar is so SAD... when will it stop. Perhaps this will bleed enough to leak into the food business? We'll buy our food at the local store and demand to pay LESS than they paid. When we don't get our way, we'll threaten to sue and trash the store on facebook. Time for me to take my medication now.
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Great commentary and even better Blog Chris.... I hope this thread takes off, it got nearly a hundred responses on my Facebook Page last week.
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