Professional Community for Automotive Marketers, Car Dealers, OEM and Suppliers
I have a friend who works for a major automotive lead provider... She sent the following bullet pointed lists to me, and asked that I do not disclose her identity. She copied these lists out of an email that her company's newest VP (who came from True Car and worked directly for Scott Painter) sent to their internal team.
Select Affinity Partners (No-Haggle Auto Buying Program) – Zag traditional model – only premium dealers get these leads
Distribution Partners (TrueCar Price Reports)
I am posting this to the ADM Forum section to generate discussions around the topics referenced in each section and the bullet points that follow... What is your opinion or insight on the listed sections shown?
Haley Paglia has registered a special vanity domain and short-cut URL for the ADM Professional Community and assigned it to this Forum Discussion:
Please feel free to use this short-cut URL to refer people to this discussion and to get here without having to start at the ADM Showroom page...
Larry, you and I have a history, and I'd like to say that last post by you was brilliant beyond what many others have said. Please re-post it on the original blogs because that's the ones Truecar is monitoring most... JIM
Yes Jim we do have a coloful history :)
There are a lot of things we agree on and some we don't but I think the biggest thing we have in common is that we LOVE THE CAR BUSINESS and we don't like seeing people take advantage of dealers. This industry is filled with people who came in thinking they were smarter than dealers, many still do. Thinking they could do it better than the dealer, but who is still here?????
Well it aint CarsDirect it’s the dealer. It’s the dealers innovation and passion that makes this whole thing work and I just wish people like Scott Painter would stop trying to vilify that and work to help the industry instead of trying to rip it's very fabric apart.
Really pleased to see Larry, Ralph, Rob and others peeling the onion and exposing Truecar and the overwhelming extent of the plot. Too many people are either ignorant or bought off and have no grasp on how serious this is, saying oh well just have to sell our way past it. They don't get it. Listen to Painter's words on the video...
"...future releases will address other parts of the car buying process, financing, leasing, insurance, maintenance, repair, refueling it’s a four trillion dollar ecosystem, it’s the biggest category on the web today and from a business model perspective, being able to aggregate an audience is core to the advertising business model and the auto category is one of the most lucrative in terms of a CPM and lead generation basis…”
Scott Painter - TrueCar
He is saying they're going to take over financing, leasing, and then the service department, insurance, even refueling and maintenance. Painter and his investors intend to hijack the entire dealership system replacing it with big box retailers,,,and then dictating to the manufacturers like Wal-mart. He laid it out in no unclear terms.
Those dealerships making money with TrueCar do not get it either... the tactics they are using to overcome the TrueCar certificate lowball quote bait and switch or added addendums, or holding on the trade, high finance, etc... these loopholes are being closed by TrueCar one at a time until they disappear...poof.
Profitable TrueCar dealers are bragging about the very tactics most of us have sworn off of. No amount of motivational speeches or sales training is going to overcome this ominous threat that I believe is a result of data theft.
Painter talks about buying data that is readily available from DMS providers and other sources... Excuse me, the only information he could possibly be buying, no matter where he buys, was originally stolen from a dealers DMS or supplied by a manufacturer to somebody. We as an industry need to lock down data in sales, service and otherwise.
Vendors do need access to data and that access should only be exactly the fields of information required to perform a service to a dealer. AND, that vendor should NOT have the right or ability to sell that data or pass it to a third or fourth party or affiliate company under penalty of law.
Jim, we have approached a time where some in the industry "get it" and some do not. And presenting a million arguments won't change their mind--they listen to the call I had with Painter, for example, and they hear his "regrets" and his denial of using data for his pricing curve. Well, he regrets those words because he got caught out before he had taken over, and as I told him on the call--and as is said here in this thread--the data came from the DEALER TO BEGIN WITH and is repurposed AGAINST the dealer. And his minions in these threads have been very clear to defend the idea of the car as a commodity and that there are too many dealers, etc.
So, we can have the "No Dealer Left Behind" program, or we can tackle the heart of this issue: Remove their DMS access. They need it, and they do everything they can to move the issue away from it. Which is the "tell", of course, about how important it is TO VALIDATE, not "create" their pricing curve. AND to have inputs to all the other "future releases".
They've used all their data to "save the consumers" $1.5billion so far. How much of that was dealer profits? Paychecks to folks with families?
And so it is up to all of us who do "get it" to work to make sure we don't go the way of the travel agent.
I have given this a lot of thought and though I have plenty of concerns it's apparent that Truecar will continue to grow. To the consumer this is an excellent idea and remember everyones great idea is someone elses worst nightmare. I remember when people said that the internet was going to be the end of the showrooms. People will always need sales people and showrooms to buy a vehicle, remember Scott Painter tried that already with Carsdirect. He wanted to sell vehicles online, this is not his first rodeo he's been around a while. He is the perfect example of try and try again and I think he has finally done it.
I think this is going to be one of the hardest pills the auto industry will have to swallow. Dealers that cancel will only make other dealers more profitable cause Truecar leads people to their dealers. Remember this is a consumer driven industry, you can have the greatest vehicle but if the consumers don't buy it, how good was it. I remember when I was selling vehicles the 1992 Chevy Cavalier became the hottest thing due to a special price.
It's not hard to figure out what cost is on a vehicle, companies like Edmunds have been showing consumers this information for years but dealers still sign up for their program. The Edmunds program tells you what the average market rate on a vehicle is as it also shares cost. It also gives you the option to select three different dealers, the charge for this program to dealers is anywhere from 3k-16k per month without the promise or guranteed sale!
The biggest threat about Truecar is that it affects and disrupts other vendors and the industry itself. It's going to be very interesting to see how they can overcome the DMS issue due to the way they bill dealers.
Clarence, I agree that we may not be able to stop Truecar. Consumers may decide that this is the way they want to purchase cars and if that happens, we will be forced to adapt. What we should avoid is becoming a punchline to a joke because we actually helped slit our own throats. Let Truecar build a better mousetrap without our income stream and data. I don't see why we would want to participate in helping Truecar if we really believe that salespeople are valuable to the sales and ownership experience.
Clarence, Sounds like your throwing in the towel. This is far from over. Just this past week there have been a LOT of dealers cancelling. Government reviews of their policies are starting. I would be curious to see how all these investigations and posts are effecting their financial (IPO) status. Stay tough. Keep their feet to the accountability fire. Good Selling, dtg
Nobody's throwing in the towel David. TrueCar is on the ropes and I've some surprises coming for them. We will get them where they live when the investors begin to run... watch and smile... Shock and Awe...JIM
We are in a perpetual battle over this very issue. Lucky for us, we have a robust CRM and a savvy e-Commerce manager who tracks the "source" of all our leads. TrueCar is claiming a $300 bounty on many of our sales even though they originated elsewhere. We screenshot our CRM records and reject the $300 invoice.
Recently, I have noticed that TrueCar presented more than 3 "certified" dealerships to prospects, thereby ensuring that they would collect $300 from somebody, regardless if they were actually the source of that ultimate sale.
Ralph is absolutely correct. If you track your prospects you will find that many of them did not "originate" with TrueCar and you should not pay them a finder's fee.
Group 1 dumps TrueCar to shield data
Honda officials asked dealership group to rethink dealings with lead generator
Group 1 Automotive, the nation's fourth-largest auto retailer, last week ordered all participating stores to cut ties with TrueCar.com, citing concerns over the security of data plumbed from dealers' computer systems by the fast-growing online lead generator.
The move came soon after officials from Honda suggested to Group 1 executives at a Honda event last week that they rethink their stores' dealings with TrueCar, said Peter DeLongchamps, Group 1 vice president of manufacturer relations and public affairs.
A Honda spokesman said he was not aware of such a request.
TrueCar has been hurt by enforcement of a Honda policy that threatens to withhold marketing dollars if dealers advertise vehicles below invoice price. Many shoppers on TrueCar's Web site are able to secure prices below invoice as dealers bid for the business.
Group 1, of Houston, has 108 stores, 42 of which were TrueCar participants. Of the 108, eight are Honda dealerships.
TrueCar has lately been a target of criticism among retailers that say the rising influence of Internet shopping sites is driving down transaction prices for new vehicles.
But Group 1 cited not pricing but potential privacy risks to consumers and to dealerships posed when TrueCar and other vendors gain access to data contained in dealer management system software. TrueCar requires access to verify vehicle sales resulting from the leads it provides.
And DeLongchamps said the company was not convinced that the online leads generated enough revenue and profit, given the requirement that TrueCar have access to dealership data.
"We questioned the value proposition," he said.
DeLongchamps said several Honda officials at the Las Vegas event had asked several Group 1 officials to rethink Group 1's dealings with TrueCar.
American Honda Motor Co. spokesman Chris Martin said Honda has had no official communication with Group 1 about TrueCar, though he said he can't confirm what takes place in conversations between Honda field officers and dealers.
The 42 Group 1 stores that had been TrueCar participants paid TrueCar a $299 fee for any lead that resulted in the sale of a new car and $399 for a successful used-car lead.
In addition to offering discounted prices to shoppers, TrueCar's Web site, truecar.com, allows shoppers to view transaction prices on vehicles in their area. TrueCar says it gets the data from 30 sources, including financial institutions, but not from the dealer management systems of participating dealers.
TrueCar CEO Scott Painter said he was sorry to lose Group 1 as a customer and said he would work to persuade the group to come back.
He defended TrueCar's data security, saying TrueCar uses dealer data only to verify vehicles sold from TrueCar leads and for no other purpose.
"There has been a lot of misinformation about us," Painter said.
He said he has spent most of the past several days answering questions about the integrity of TrueCar's processes to protect dealer data.
Dealers have increasingly voiced concerns about what is happening to data extracted from dealer management systems by third-party vendors. They have raised the specter of data being sold to marketers and others without the dealers' knowledge.
The dealer management system is the nerve center of a store, containing information on everything from customer transaction and financing data to vehicle inventory and the store's accounting reports.
DeLongchamps said Group 1 dealers, acting independently, have signed up with TrueCar over the years. He said Group 1 has had privacy concerns about any third-party vendor that is able to extract data from dealership operating software.
Painter said that while Group 1 had been a significant customer for TrueCar, its 42 participating stores accounted for less than 1 percent of the 5,840 dealer franchises participating with the shopping site. He said TrueCar has dealerships in all markets being vacated by Group 1. Group 1 has stores in 15 states.
Honda does not prohibit Honda or Acura dealers from advertising vehicles below invoice. But the company has clear guidelines that put a dealer's local marketing allowance at risk if a dealer does so. The allowance can account for 1 to 2 percent per new vehicle sold, or $300 to $600 for a $30,000 vehicle.
TrueCar prides itself on finding discounts for vehicle shoppers by getting dealers to bid for the business, many at below invoice. Invoice typically is several hundred dollars above the dealer cost of a vehicle.
But the enforcement of Honda's standard longstanding policy on advertising below-invoice pricing prompted TrueCar this month to put a disclaimer on its Honda shopping page. It warned Honda shoppers with a banner that they might not get TrueCar's low price.
TrueCar has big expansion plans. Next month TrueCar becomes the exclusive online vehicle shopping partner of Yahoo.com, the search-engine giant. TrueCar is paying $50 million a year over three years for the partnership.
As a result of the deal, TrueCar expects traffic on its Web site to jump from a couple of million unique visitors a month to 20 million.
TrueCar's Painter has said he expects sales from TrueCar leads almost to double in 2012 to about 500,000 vehicles, and participating dealer franchises roughly to double, to 10,000.
It doesn’t seem like TrueCar is going to have such a Merry Christmas this year.
Since Jeff wrote about TrueCar and some of their tatics back in June –Edmunds TMV vs TrueCar – Dealers, wake up! , others are helping to bring this situation to the fore front. It’s great to see our industry come together and express our concerns and opinions around this TrueCar debacle. I can’t recall another time where dealers and industry goo-roos have reached and leverage so many channels of online news and social to not only express their opinions but also help amplify the message.
The automotive industry has been energized and polarized surrounding the TrueCar business model. Since dealers are for and against the model, it is very important to follow the legal implications of the TrueCar process.
As promised, I told you that various State regulators and Dealer Associations were drafting letters to their constituents and members warning of potential legal concerns.
The Colorado Department of Revenue issued this letter on December 15, 2011 and I expect more similar letters to follow. The TrueCar discussion is now moving into a legal discussion with dealers facing potential fines for participating on a model that regulators may deem as violating State laws.
Take a peek at this letter and share your thoughts. I’ll have a few more letters to share in the coming weeks as they are drafted and published.
For a larger version of the letter view it on the Colorado Government site.
Addition by Jeff Kershner…
Another TrueCar UPDATE: Group 1, the nation’s fourth-largest auto retailer, last week ordered all participating stores to cut ties with TrueCar.com – Click here to read the article. I had heard about this last friday and sent out a tweet that received several responses (follow@dealerrefresh on twitter). This apparently was brought to light during a meeting with their local Honda Representatives.
Jim - I added the original document from the State of Colorado for ADM members to download in the Forum Post above: TrueCar Banned in Colorado.pdf, 79 KB