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True Car and ZAG - Cyber Bandits or Good for the 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







EDITOR'S NOTE: The ADM Professional Community has assigned a short-cut domain name to this blog post by Jim Ziegler to make it very easy for ADM members and readers to refer others to this web page. Please use the following URL:


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.

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Comment by Yago De Artaza Paramo on January 19, 2012 at 3:50pm



Is going to be like Costco, some dealers are laughing abut all the crap we are writting and they are milking TC for the time being.

Comment by Remove on January 19, 2012 at 3:46pm


how many dealers did not honor the prices that were quoted, True Car says that they monitor this and penalize dealers that don't, but it's seem like one big dealer group in my area was doing this on a regular basis with no problems or penalty. Again, I would like to know how many dealers were abusing this system and what did they do about it? They have all the data!

Comment by Yago De Artaza Paramo on January 19, 2012 at 3:42pm



I don't think that many--if any--other vendor has the type of access TC has from its dealers.

Comment by Steven Dietz on January 19, 2012 at 3:39pm

On the data side, you've expressed numerous concerns and I agree with some and have a different view of others.  The concerns seem to break down to data security and data use.

Data security is always important and I live in this world.  Varying GRP companies handle 70% of all mobile banking functions in the US, they process or otherwise handle over 60 million consumer credit applications annually and they do fraud detection / authentication for about 30% of all online credit card transactions.  I would not touch a company that has data security risks and I certainly know how to test for this.  Truecar is bulletproof on this and is separately audited by each of its major partners and internally many times per year.  Any dealer releasing its data should have some comfort that it is secure.  Personally, if I were a dealer I would ask my vendor to indemnify me against any loss of data provided and to show they have insurance against such loss.  I do not know of any vendor that does this, including TrueCar, but it is being explored.  it takes a little time to develop a new insurance product.

Data sharing is a requirement in the modern world.  Misuse of the data is unacceptable and both parties should agree upfront on how data will be used.  As you have noted, TrueCar's data agreements conformed with an industry standard and they were excessively broad.  The data collected and usage terms have been narrowed substantially in response to dealer concerns.

I posted a comment a few weeks ago saying that I doubt many dealers have the resources to implement and measure every one of their vendors and vendors will not have resources to create customized data agreements and implement them differently with every client.  The solution will be to create a trusted data intermediary.  That way a dealer only has to go one place to set all and monitor all data permissions and a vendor only needs one integration to access permitted data from each customer.  This is done in many industries and Keith should recognize the model.

Comment by Yago De Artaza Paramo on January 19, 2012 at 3:22pm


Costo = TrueCar?

If you take out of the equation dealers sharing transactional data, what is the difference between TrueCar and Costco?

If I remember correctly in order to be a Costco dealer you had to provide them with the lowest price for each model and guarantee that price through the season for Costco buyers. Dealers hated it and little by little they left the program because they lost money so the program is not--at least in WA--pretty much dead.

Could this happen to TrueCar?

Finding a work around.

In the end Costco also failed because dealers found ways to work around their rules by adding things to the car to inflate the price (>to have some profit on it), not offering all the models, etc. I recall Costco threatening dealers all the time at the end of the program days about kicking them out but the dealers keep playing their own game: "if they kick me out so be it". In the end Costco ran out of dealers to have in the program (or at least a significant number of them).

The issue with TC should be that they are sharing data that is very personal to the dealer's business. Any other industry in the world would consider crazy to let an outside for profit company see their books and use the data to possible sell against them. That data could be obtained by TrueCar in some states from the DOL and also from financial institutions. Since you don;t need every car sold in order to fabricate these prices, the transactional data from one of the large financial institutions in a state could provide TC what they need in exchange of some type of priority advertising/leads.

Comment by Steven Dietz on January 19, 2012 at 3:19pm

Matt Tucker:  Can you make any reference to me without it being pejorative?  I have not attacked any of you personally in this process.  The same courtesy would be appreciated.

Matt Swenson commented that he did not know what it costs other companies to create their products but it is frequently easy to find.  iPad total bill of materials is $323.25 for the 32GB CDMA model, while the 32GB GSM/HSPA version is a tad more expensive at $326.60 (

he asked about he Muppets also.  It grossed $86,748,256 as of Jan. 12 2012 on a production budget of $45 million.  Distributor gross was 93% week one and declined thereafter (Really want the details?).  Any way, my point is that supply chain transparency exists in many industries.  

Personally, I don't think a consumer cares any more about Apple profitability than they do about a dealers' profitability.  The difference with Apple is the consumer knows the market price from many sources.  I believe the only reason consumers cared about Invoice price was that its the only benchmark they could grasp in a world that lacked actual market price data.  The only reason TrueCar cares about Invoice price is that participating dealers need some benchmark for presenting their inventory pricing and invoice or MSRP are the only two baselines for this.  In response to dealer concerns about using Invoice as a baseline for dealers to set price, TrueCar is moving to MSRP but the programming takes a few days and dealer price updates and communication also takes a few days.

Comment by James A. Ziegler on January 19, 2012 at 10:49am

Yes Matt, I need that contract to add to my collection. I currently have 16 contracts that many and most dealers do business with...Wait until after NADA Convention when it hits the fan.

Comment by Keith Shetterly on January 19, 2012 at 9:00am

@ Matt:  I consider that they may be very concerned at the theoretical point I'm making here.  I wonder?  ;)  And please send Jim that fixed ops contract.  If you are okay with it, please send me a copy, too, at

Comment by Matt Tucker on January 19, 2012 at 8:56am

Just had a fixed ops (service / parts) outside company contact me about purchasing in-market customers - vehicle, full name, address, email, phone, repair history, purchase history, etc...) They would 'sell' me this info for $.50 per customer (they guaranteed 10,000 not in my current database w/ in a 50 mile radius). So, I could 'buy' my competitors data? Hmmmm....

The real devil was in the details, or should we say, the contract.  They wanted unfettered access to our DMS - now this is a company who's ONLY purposes is collecting, marketing and selling data. They wanted to "sell" us 10,000 names but have us "give" them access to over 25,000. And their contract clearly spells out (ok, not clearly, a lot of legal double talk used) that they can and will resell and reuse our data without compensation or notification.

Wow. Dealers - be sure you not only watch variable ops, keep a strong eye on fixed ops as well. The data miners are everywhere and they are contractually putting you in an interesting legal position and allowing others to buy your customers - and YOU are paying them to do it. Just wow.

@Jim - I can send a copy if you would like.

Comment by Matt Tucker on January 19, 2012 at 8:48am

Keith / Ed - Great points. Well outlined.

 Also, you notice how our hit-n-run TC reps and investors have been no where to be found lately. I think they may be scared that Professor Shetterly may bring his lessons and proof on his theorical discourse, thus casting a very bright light into a now very dark corner.

 Or perhaps they fear a bite from the rabid Alpha Dawg - afterall one of the symptoms of rabies after being bitten are Stress, Anxiety, and Tension. On second thought, I think Alpha Dawg may have already bit. Metaphorically and Theoretically speaking, of course.

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